Correlation Between Aggressive Growth and Sp 500
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Sp 500 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 Aggressive Growth and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Fund and Sp 500 Index, you can compare the effects of market volatilities on Aggressive Growth and Sp 500 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 Aggressive Growth with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Sp 500.
Diversification Opportunities for Aggressive Growth and Sp 500
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aggressive and USPRX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Fund and Sp 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Index and Aggressive 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 Aggressive Growth Fund are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Index has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Sp 500 go up and down completely randomly.
Pair Corralation between Aggressive Growth and Sp 500
Assuming the 90 days horizon Aggressive Growth Fund is expected to generate 1.38 times more return on investment than Sp 500. However, Aggressive Growth is 1.38 times more volatile than Sp 500 Index. It trades about 0.29 of its potential returns per unit of risk. Sp 500 Index is currently generating about 0.38 per unit of risk. If you would invest 6,745 in Aggressive Growth Fund on September 1, 2024 and sell it today you would earn a total of 436.00 from holding Aggressive Growth Fund or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Growth Fund vs. Sp 500 Index
Performance |
| Timeline |
| Aggressive Growth |
| Sp 500 Index |
Aggressive Growth and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Growth and Sp 500
The main advantage of trading using opposite Aggressive Growth and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Aggressive Growth vs. John Hancock Money | Aggressive Growth vs. Legg Mason Partners | Aggressive Growth vs. Blackrock Exchange Portfolio | Aggressive Growth vs. Dreyfus Institutional Reserves |
| Sp 500 vs. Small Cap Stock | Sp 500 vs. Extended Market Index | Sp 500 vs. Value Fund Value | Sp 500 vs. Income Stock 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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