Correlation Between Growth Fund and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Fund 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 Fund Growth and Intermediate Term Bond Fund, you can compare the effects of market volatilities on Growth Fund 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 Fund with a short position of Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Intermediate Term.
Diversification Opportunities for Growth Fund and Intermediate Term
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growth and Intermediate is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Growth 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 Fund 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 Fund Growth 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 Fund i.e., Growth Fund and Intermediate Term go up and down completely randomly.
Pair Corralation between Growth Fund and Intermediate Term
Assuming the 90 days horizon Growth Fund Growth is expected to generate 3.33 times more return on investment than Intermediate Term. However, Growth Fund is 3.33 times more volatile than Intermediate Term Bond Fund. It trades about 0.11 of its potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.04 per unit of risk. If you would invest 3,186 in Growth Fund Growth on August 25, 2024 and sell it today you would earn a total of 1,015 from holding Growth Fund Growth or generate 31.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Growth vs. Intermediate Term Bond Fund
Performance |
| Timeline |
| Growth Fund Growth |
| Intermediate Term Bond |
Growth Fund and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Intermediate Term
The main advantage of trading using opposite Growth Fund and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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 Fund vs. Income Stock Fund | Growth Fund vs. Emerging Markets Fund | Growth Fund vs. International Fund International | Growth Fund vs. Small Cap Stock |
| Intermediate Term vs. Capital Growth Fund | Intermediate Term vs. Emerging Markets Fund | Intermediate Term vs. High Income Fund | Intermediate 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |