Correlation Between Us Core and Growth Strategy

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

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

Diversification Opportunities for Us Core and Growth Strategy

0.76

Correlation Coefficient

Us Core  Growth Strategy

Poor diversification

The 3 months correlation between RSQAX and Growth is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Us E Equity and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and Us Core 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 Us E Equity are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Us Core i.e., Us Core and Growth Strategy go up and down completely randomly.

Pair Corralation between Us Core and Growth Strategy

Assuming the 90 days horizon Us E Equity is expected to under-perform the Growth Strategy. In addition to that, Us Core is 2.87 times more volatile than Growth Strategy Fund. It trades about -0.11 of its total potential returns per unit of risk. Growth Strategy Fund is currently generating about -0.09 per unit of volatility. If you would invest  1,208  in Growth Strategy Fund on December 1, 2024 and sell it today you would lose (41.00) from holding Growth Strategy Fund or give up 3.39% of portfolio value over 90 days.

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

Us E Equity  vs.  Growth Strategy Fund

Us E Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us E Equity 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Growth Strategy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Us Core and Growth Strategy

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

The idea behind Us E Equity and Growth Strategy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.