Correlation Between Select Fund and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Select Fund and Growth Fund 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 Select Fund and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund C and Growth Fund C, you can compare the effects of market volatilities on Select Fund and Growth Fund 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 Select Fund with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Growth Fund.
Diversification Opportunities for Select Fund and Growth Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Select and GROWTH is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund C and Growth Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund C and Select 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 Select Fund C are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund C has no effect on the direction of Select Fund i.e., Select Fund and Growth Fund go up and down completely randomly.
Pair Corralation between Select Fund and Growth Fund
Assuming the 90 days horizon Select Fund is expected to generate 1.27 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Select Fund C is 1.03 times less risky than Growth Fund. It trades about 0.18 of its potential returns per unit of risk. Growth Fund C is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,037 in Growth Fund C on September 10, 2024 and sell it today you would earn a total of 183.00 from holding Growth Fund C or generate 3.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Select Fund C vs. Growth Fund C
Performance |
Timeline |
Select Fund C |
Growth Fund C |
Select Fund and Growth Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Fund and Growth Fund
The main advantage of trading using opposite Select Fund and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.Select Fund vs. Schwab Treasury Money | Select Fund vs. Hsbc Treasury Money | Select Fund vs. Franklin Government Money | Select Fund vs. Matson Money Equity |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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