Correlation Between International Growth and Global Growth
Can any of the company-specific risk be diversified away by investing in both International Growth and Global 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 Global 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 Global Growth Fund, you can compare the effects of market volatilities on International Growth and Global 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 Global Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Global Growth.
Diversification Opportunities for International Growth and Global Growth
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Global is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Global Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global 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 Global Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Growth has no effect on the direction of International Growth i.e., International Growth and Global Growth go up and down completely randomly.
Pair Corralation between International Growth and Global Growth
Assuming the 90 days horizon International Growth Fund is expected to generate 0.74 times more return on investment than Global Growth. However, International Growth Fund is 1.35 times less risky than Global Growth. It trades about 0.29 of its potential returns per unit of risk. Global Growth Fund is currently generating about 0.17 per unit of risk. If you would invest 1,224 in International Growth Fund on November 3, 2024 and sell it today you would earn a total of 62.00 from holding International Growth Fund or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. Global Growth Fund
Performance |
| Timeline |
| International Growth |
| Global Growth |
International Growth and Global Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Global Growth
The main advantage of trading using opposite International Growth and Global Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Global 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 Global Growth will offset losses from the drop in Global 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 |
| Global Growth vs. Emerging Markets Fund | Global Growth vs. International Growth Fund | Global Growth vs. Heritage Fund Investor | Global Growth vs. Select Fund Investor |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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