Correlation Between Global Managed and Capital Growth
Can any of the company-specific risk be diversified away by investing in both Global Managed and Capital 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 Global Managed and Capital Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Managed Volatility and Capital Growth Fund, you can compare the effects of market volatilities on Global Managed and Capital 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 Global Managed with a short position of Capital Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Managed and Capital Growth.
Diversification Opportunities for Global Managed and Capital Growth
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Capital is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global Managed Volatility and Capital Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Growth and Global Managed 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 Global Managed Volatility are associated (or correlated) with Capital Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Growth has no effect on the direction of Global Managed i.e., Global Managed and Capital Growth go up and down completely randomly.
Pair Corralation between Global Managed and Capital Growth
Assuming the 90 days horizon Global Managed Volatility is expected to generate 0.26 times more return on investment than Capital Growth. However, Global Managed Volatility is 3.81 times less risky than Capital Growth. It trades about -0.04 of its potential returns per unit of risk. Capital Growth Fund is currently generating about -0.2 per unit of risk. If you would invest 1,155 in Global Managed Volatility on September 19, 2024 and sell it today you would lose (6.00) from holding Global Managed Volatility or give up 0.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Global Managed Volatility vs. Capital Growth Fund
Performance |
Timeline |
Global Managed Volatility |
Capital Growth |
Global Managed and Capital Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global Managed and Capital Growth
The main advantage of trading using opposite Global Managed and Capital Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Managed position performs unexpectedly, Capital 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 Capital Growth will offset losses from the drop in Capital Growth's long position.Global Managed vs. Capital Growth Fund | Global Managed vs. Emerging Markets Fund | Global Managed vs. High Income Fund | Global Managed vs. International Fund International |
Capital Growth vs. Emerging Markets Fund | Capital Growth vs. High Income Fund | Capital Growth vs. International Fund International | Capital Growth vs. Growth Income 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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