Correlation Between Capital Growth and Ultra Short-term
Can any of the company-specific risk be diversified away by investing in both Capital Growth and Ultra 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 Capital Growth and Ultra Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Growth Fund and Ultra Short Term Bond, you can compare the effects of market volatilities on Capital Growth and Ultra 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 Capital Growth with a short position of Ultra Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Growth and Ultra Short-term.
Diversification Opportunities for Capital Growth and Ultra Short-term
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Ultra is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Capital Growth Fund and Ultra Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short Term and Capital 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 Capital Growth Fund are associated (or correlated) with Ultra 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 Ultra Short Term has no effect on the direction of Capital Growth i.e., Capital Growth and Ultra Short-term go up and down completely randomly.
Pair Corralation between Capital Growth and Ultra Short-term
Assuming the 90 days horizon Capital Growth Fund is expected to generate 12.22 times more return on investment than Ultra Short-term. However, Capital Growth is 12.22 times more volatile than Ultra Short Term Bond. It trades about 0.29 of its potential returns per unit of risk. Ultra Short Term Bond is currently generating about 0.1 per unit of risk. If you would invest 1,431 in Capital Growth Fund on September 1, 2024 and sell it today you would earn a total of 53.00 from holding Capital Growth Fund or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Growth Fund vs. Ultra Short Term Bond
Performance |
| Timeline |
| Capital Growth |
| Ultra Short Term |
Capital Growth and Ultra Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Growth and Ultra Short-term
The main advantage of trading using opposite Capital Growth and Ultra Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Growth position performs unexpectedly, Ultra 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 Ultra Short-term will offset losses from the drop in Ultra Short-term's long position.| Capital Growth vs. Chestnut Street Exchange | Capital Growth vs. Jpmorgan Trust I | Capital Growth vs. Prudential Government Money | Capital Growth vs. Ashmore Emerging Markets |
| Ultra Short-term vs. Capital Growth Fund | Ultra Short-term vs. Emerging Markets Fund | Ultra Short-term vs. High Income Fund | Ultra Short-term vs. International Fund International |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |