Correlation Between Growth Fund and Inflation Protected
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Inflation Protected 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 Inflation Protected 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 Inflation Protected Fund, you can compare the effects of market volatilities on Growth Fund and Inflation Protected 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 Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Inflation Protected.
Diversification Opportunities for Growth Fund and Inflation Protected
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Growth and Inflation is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Growth and Inflation Protected Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Growth Fund i.e., Growth Fund and Inflation Protected go up and down completely randomly.
Pair Corralation between Growth Fund and Inflation Protected
Assuming the 90 days horizon Growth Fund Growth is expected to generate 4.39 times more return on investment than Inflation Protected. However, Growth Fund is 4.39 times more volatile than Inflation Protected Fund. It trades about 0.1 of its potential returns per unit of risk. Inflation Protected Fund is currently generating about -0.02 per unit of risk. If you would invest 1,670 in Growth Fund Growth on August 27, 2024 and sell it today you would earn a total of 42.00 from holding Growth Fund Growth or generate 2.51% 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. Inflation Protected Fund
Performance |
| Timeline |
| Growth Fund Growth |
| Inflation Protected |
Growth Fund and Inflation Protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Inflation Protected
The main advantage of trading using opposite Growth Fund and Inflation Protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Inflation Protected 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 Inflation Protected will offset losses from the drop in Inflation Protected's long position.| Growth Fund vs. Mid Cap Index | Growth Fund vs. Mid Cap Strategic | Growth Fund vs. Valic Company I | Growth Fund vs. Stock Index Fund |
| Inflation Protected vs. Mid Cap Index | Inflation Protected vs. Mid Cap Strategic | Inflation Protected vs. Valic Company I | Inflation Protected vs. Valic Company I |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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