Correlation Between International Growth and Edgewood Growth
Can any of the company-specific risk be diversified away by investing in both International Growth and Edgewood Growth 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 Edgewood Growth 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 Edgewood Growth Fund, you can compare the effects of market volatilities on International Growth and Edgewood Growth 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 Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Edgewood Growth.
Diversification Opportunities for International Growth and Edgewood Growth
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Edgewood is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of International Growth i.e., International Growth and Edgewood Growth go up and down completely randomly.
Pair Corralation between International Growth and Edgewood Growth
Assuming the 90 days horizon International Growth is expected to generate 3.19 times less return on investment than Edgewood Growth. But when comparing it to its historical volatility, International Growth Fund is 1.12 times less risky than Edgewood Growth. It trades about 0.02 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,673 in Edgewood Growth Fund on September 13, 2024 and sell it today you would earn a total of 422.00 from holding Edgewood Growth Fund or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. Edgewood Growth Fund
Performance |
| Timeline |
| International Growth |
| Edgewood Growth |
International Growth and Edgewood Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Edgewood Growth
The main advantage of trading using opposite International Growth and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Edgewood Growth 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 Edgewood Growth will offset losses from the drop in Edgewood Growth's long position.| International Growth vs. Value Fund Investor | International Growth vs. Ultra Fund Investor | International Growth vs. Growth Fund Investor | International Growth vs. Income Growth Fund |
| Edgewood Growth vs. Edgewood Growth Fund | Edgewood Growth vs. Polen Growth Fund | Edgewood Growth vs. Doubleline Shiller Enhanced | Edgewood Growth vs. Parnassus Endeavor Fund |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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