Correlation Between Aggressive Growth and Science Technology
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Science Technology 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 Science Technology 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 Science Technology Fund, you can compare the effects of market volatilities on Aggressive Growth and Science Technology 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 Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Science Technology.
Diversification Opportunities for Aggressive Growth and Science Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aggressive and Science is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Fund and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Science Technology go up and down completely randomly.
Pair Corralation between Aggressive Growth and Science Technology
Assuming the 90 days horizon Aggressive Growth Fund is expected to generate 0.88 times more return on investment than Science Technology. However, Aggressive Growth Fund is 1.13 times less risky than Science Technology. It trades about 0.11 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.08 per unit of risk. If you would invest 3,805 in Aggressive Growth Fund on October 21, 2024 and sell it today you would earn a total of 2,963 from holding Aggressive Growth Fund or generate 77.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Growth Fund vs. Science Technology Fund
Performance |
| Timeline |
| Aggressive Growth |
| Science Technology |
Aggressive Growth and Science Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Growth and Science Technology
The main advantage of trading using opposite Aggressive Growth and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Science Technology 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 Science Technology will offset losses from the drop in Science Technology's long position.| Aggressive Growth vs. Aqr Global Macro | Aggressive Growth vs. Dreyfusstandish Global Fixed | Aggressive Growth vs. Investec Global Franchise | Aggressive Growth vs. Mirova Global Green |
| Science Technology vs. Aggressive Growth Fund | Science Technology vs. Sp 500 Index | Science Technology vs. Nasdaq 100 Index Fund | Science Technology 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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