Correlation Between Aggressive Growth and Tsmxx

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

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

Diversification Opportunities for Aggressive Growth and Tsmxx

-0.63

Correlation Coefficient

Aggressive Growth  Tsmxx

Excellent diversification

The 3 months correlation between Aggressive and Tsmxx is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Portfolio and Tsmxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsmxx and Aggressive 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 Aggressive Growth Portfolio are associated (or correlated) with Tsmxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsmxx has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Tsmxx go up and down completely randomly.

Pair Corralation between Aggressive Growth and Tsmxx

If you would invest  100.00  in Tsmxx on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Tsmxx or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Aggressive Growth Portfolio  vs.  Tsmxx

Aggressive Growth

Risk-Adjusted Performance

0 of 100

Insignificant

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

Tsmxx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tsmxx are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tsmxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aggressive Growth and Tsmxx

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

The idea behind Aggressive Growth Portfolio and Tsmxx 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.