Correlation Between Europacific Growth and Ninety One

Can any of the company-specific risk be diversified away by investing in both Europacific Growth and Ninety One 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 Europacific Growth and Ninety One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Europacific Growth Fund and Ninety One International, you can compare the effects of market volatilities on Europacific Growth and Ninety One 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 Europacific Growth with a short position of Ninety One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Ninety One.

Diversification Opportunities for Europacific Growth and Ninety One

0.95

Correlation Coefficient

Europacific Growth  Ninety One

Almost no diversification

The 3 months correlation between Europacific and Ninety is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Ninety One International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninety One International and Europacific 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 Europacific Growth Fund are associated (or correlated) with Ninety One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninety One International has no effect on the direction of Europacific Growth i.e., Europacific Growth and Ninety One go up and down completely randomly.

Pair Corralation between Europacific Growth and Ninety One

Assuming the 90 days horizon Europacific Growth is expected to generate 3.03 times less return on investment than Ninety One. In addition to that, Europacific Growth is 1.03 times more volatile than Ninety One International. It trades about 0.01 of its total potential returns per unit of risk. Ninety One International is currently generating about 0.02 per unit of volatility. If you would invest  1,071  in Ninety One International on September 14, 2024 and sell it today you would earn a total of  6.00  from holding Ninety One International or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Europacific Growth Fund  vs.  Ninety One International

Europacific Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europacific Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Europacific Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ninety One International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ninety One International are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ninety One is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europacific Growth and Ninety One

The main advantage of trading using opposite Europacific Growth and Ninety One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, Ninety One 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 Ninety One will offset losses from the drop in Ninety One's long position.

The idea behind Europacific Growth Fund and Ninety One International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.