Correlation Between International Fund and Capital Growth
Can any of the company-specific risk be diversified away by investing in both International Fund and Capital Growth 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 International Fund and Capital Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fund International and Capital Growth Fund, you can compare the effects of market volatilities on International Fund and Capital Growth 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 International Fund with a short position of Capital Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Capital Growth.
Diversification Opportunities for International Fund and Capital Growth
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between International and Capital is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and Capital Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Growth and International 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 International Fund International are associated (or correlated) with Capital Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Growth has no effect on the direction of International Fund i.e., International Fund and Capital Growth go up and down completely randomly.
Pair Corralation between International Fund and Capital Growth
Assuming the 90 days horizon International Fund is expected to generate 1.24 times less return on investment than Capital Growth. In addition to that, International Fund is 1.02 times more volatile than Capital Growth Fund. It trades about 0.06 of its total potential returns per unit of risk. Capital Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest 1,120 in Capital Growth Fund on September 1, 2024 and sell it today you would earn a total of 350.00 from holding Capital Growth Fund or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fund Internation vs. Capital Growth Fund
Performance |
| Timeline |
| International Fund |
| Capital Growth |
International Fund and Capital Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fund and Capital Growth
The main advantage of trading using opposite International Fund and Capital Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund position performs unexpectedly, Capital Growth 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 Capital Growth will offset losses from the drop in Capital Growth's long position.| International Fund vs. Income Fund Income | International Fund vs. Usaa Nasdaq 100 | International Fund vs. Victory Diversified Stock | International Fund vs. Intermediate Term Bond Fund |
| Capital Growth vs. International Fund International | Capital Growth vs. Emerging Markets Fund | Capital Growth vs. Science Technology Fund | Capital Growth vs. Aggressive Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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