Correlation Between Primecap Odyssey and Edgewood Growth

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

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

Diversification Opportunities for Primecap Odyssey and Edgewood Growth

0.89

Correlation Coefficient

Primecap Odyssey  Edgewood Growth

Very poor diversification

The 3 months correlation between Primecap and Edgewood is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Primecap Odyssey Growth and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth and Primecap Odyssey 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 Primecap Odyssey Growth are associated (or correlated) with Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Primecap Odyssey i.e., Primecap Odyssey and Edgewood Growth go up and down completely randomly.

Pair Corralation between Primecap Odyssey and Edgewood Growth

Assuming the 90 days horizon Primecap Odyssey is expected to generate 1.92 times less return on investment than Edgewood Growth. In addition to that, Primecap Odyssey is 1.05 times more volatile than Edgewood Growth Fund. It trades about 0.02 of its total potential returns per unit of risk. Edgewood Growth Fund is currently generating about 0.05 per unit of volatility. If you would invest  3,098  in Edgewood Growth Fund on October 9, 2024 and sell it today you would earn a total of  994.00  from holding Edgewood Growth Fund or generate 32.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Primecap Odyssey Growth  vs.  Edgewood Growth Fund

Primecap Odyssey Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primecap Odyssey Growth 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Edgewood Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewood 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Primecap Odyssey and Edgewood Growth

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

The idea behind Primecap Odyssey Growth and Edgewood 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.