Correlation Between Chase Growth and Europacific Growth

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

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

Diversification Opportunities for Chase Growth and Europacific Growth

0.49

Correlation Coefficient

Chase Growth  Europacific Growth

Very weak diversification

The 3 months correlation between Chase and Europacific is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chase Growth Fund and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth and Chase 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 Chase Growth Fund are associated (or correlated) with Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of Chase Growth i.e., Chase Growth and Europacific Growth go up and down completely randomly.

Pair Corralation between Chase Growth and Europacific Growth

Assuming the 90 days horizon Chase Growth Fund is expected to under-perform the Europacific Growth. In addition to that, Chase Growth is 2.77 times more volatile than Europacific Growth Fund. It trades about -0.14 of its total potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.0 per unit of volatility. If you would invest  5,762  in Europacific Growth Fund on November 29, 2024 and sell it today you would earn a total of  1.00  from holding Europacific Growth Fund or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Chase Growth Fund  vs.  Europacific Growth Fund

Chase Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chase Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Europacific Growth

Risk-Adjusted Performance

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 technical and fundamental indicators, Europacific Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chase Growth and Europacific Growth

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

The idea behind Chase Growth Fund and Europacific Growth Fund 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.