Correlation Between Growth Fund and Tax-managed

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

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

Diversification Opportunities for Growth Fund and Tax-managed

0.8

Correlation Coefficient

Growth Fund  Tax-managed

Very poor diversification

The 3 months correlation between Growth and Tax-managed is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Tax Managed Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Large and Growth 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 Growth Fund Of are associated (or correlated) with Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Large has no effect on the direction of Growth Fund i.e., Growth Fund and Tax-managed go up and down completely randomly.

Pair Corralation between Growth Fund and Tax-managed

Assuming the 90 days horizon Growth Fund Of is expected to generate 1.3 times more return on investment than Tax-managed. However, Growth Fund is 1.3 times more volatile than Tax Managed Large Cap. It trades about 0.07 of its potential returns per unit of risk. Tax Managed Large Cap is currently generating about 0.03 per unit of risk. If you would invest  7,279  in Growth Fund Of on October 11, 2024 and sell it today you would earn a total of  277.00  from holding Growth Fund Of or generate 3.81% return on investment over 90 days.

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

Growth Fund Of  vs.  Tax Managed Large Cap

Growth Fund

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tax Managed Large

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Growth Fund and Tax-managed

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

The idea behind Growth Fund Of and Tax Managed Large Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.