Correlation Between International Growth and Short Term
Can any of the company-specific risk be diversified away by investing in both International Growth and Short Term 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 Short Term 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 Short Term Government Fund, you can compare the effects of market volatilities on International Growth and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Short Term.
Diversification Opportunities for International Growth and Short Term
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Short is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of International Growth i.e., International Growth and Short Term go up and down completely randomly.
Pair Corralation between International Growth and Short Term
If you would invest 1,238 in International Growth Fund on September 18, 2024 and sell it today you would earn a total of 43.00 from holding International Growth Fund or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. Short Term Government Fund
Performance |
| Timeline |
| International Growth |
| Short Term Government |
International Growth and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Short Term
The main advantage of trading using opposite International Growth and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term'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 |
| Short Term vs. Mid Cap Value | Short Term vs. Equity Growth Fund | Short Term vs. Income Growth Fund | Short Term vs. Diversified Bond 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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