Correlation Between Growth Income and Intermediate-term
Can any of the company-specific risk be diversified away by investing in both Growth Income and Intermediate-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 Growth Income and Intermediate-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Income Fund and Intermediate Term Bond Fund, you can compare the effects of market volatilities on Growth Income and Intermediate-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 Growth Income with a short position of Intermediate-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Income and Intermediate-term.
Diversification Opportunities for Growth Income and Intermediate-term
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growth and Intermediate-term is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Growth Income Fund and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and Growth Income 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 Growth Income Fund are associated (or correlated) with Intermediate-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of Growth Income i.e., Growth Income and Intermediate-term go up and down completely randomly.
Pair Corralation between Growth Income and Intermediate-term
Assuming the 90 days horizon Growth Income Fund is expected to generate 2.27 times more return on investment than Intermediate-term. However, Growth Income is 2.27 times more volatile than Intermediate Term Bond Fund. It trades about 0.12 of its potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.06 per unit of risk. If you would invest 2,480 in Growth Income Fund on September 1, 2024 and sell it today you would earn a total of 445.00 from holding Growth Income Fund or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Income Fund vs. Intermediate Term Bond Fund
Performance |
| Timeline |
| Growth Income |
| Intermediate Term Bond |
Growth Income and Intermediate-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Income and Intermediate-term
The main advantage of trading using opposite Growth Income and Intermediate-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Income position performs unexpectedly, Intermediate-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 Intermediate-term will offset losses from the drop in Intermediate-term's long position.| Growth Income vs. Dodge Cox Stock | Growth Income vs. Aqr Large Cap | Growth Income vs. Dana Large Cap | Growth Income vs. American Mutual Fund |
| Intermediate-term vs. International Investors Gold | Intermediate-term vs. Sprott Gold Equity | Intermediate-term vs. Goldman Sachs Esg | Intermediate-term vs. Global Gold 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |