Correlation Between International Growth and Core Plus
Can any of the company-specific risk be diversified away by investing in both International Growth and Core Plus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining International Growth and Core Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Growth Fund and Core Plus Fund, you can compare the effects of market volatilities on International Growth and Core Plus and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in International Growth with a short position of Core Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Core Plus.
Diversification Opportunities for International Growth and Core Plus
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Core is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Core Plus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Fund and International Growth is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on International Growth Fund are associated (or correlated) with Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Fund has no effect on the direction of International Growth i.e., International Growth and Core Plus go up and down completely randomly.
Pair Corralation between International Growth and Core Plus
Assuming the 90 days horizon International Growth Fund is expected to under-perform the Core Plus. In addition to that, International Growth is 2.27 times more volatile than Core Plus Fund. It trades about -0.18 of its total potential returns per unit of risk. Core Plus Fund is currently generating about -0.06 per unit of volatility. If you would invest 918.00 in Core Plus Fund on August 24, 2024 and sell it today you would lose (4.00) from holding Core Plus Fund or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Growth Fund vs. Core Plus Fund
Performance |
| Timeline |
| International Growth |
| Core Plus Fund |
International Growth and Core Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Core Plus
The main advantage of trading using opposite International Growth and Core Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Core Plus can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Core Plus will offset losses from the drop in Core Plus' long position.| International Growth vs. Value Fund Investor | International Growth vs. Ultra Fund Investor | International Growth vs. Growth Fund Investor | International Growth vs. Select Fund Investor |
| Core Plus vs. Diversified Bond Fund | Core Plus vs. High Yield Fund Investor | Core Plus vs. Government Bond Fund | Core Plus vs. Short Duration Inflation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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