Correlation Between Growth Opportunities and Eip Growth

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

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

Diversification Opportunities for Growth Opportunities and Eip Growth

0.89

Correlation Coefficient

Growth Opportunities  Eip Growth

Very poor diversification

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

Pair Corralation between Growth Opportunities and Eip Growth

Assuming the 90 days horizon Growth Opportunities is expected to generate 1.14 times less return on investment than Eip Growth. In addition to that, Growth Opportunities is 1.31 times more volatile than Eip Growth And. It trades about 0.2 of its total potential returns per unit of risk. Eip Growth And is currently generating about 0.3 per unit of volatility. If you would invest  1,749  in Eip Growth And on September 2, 2024 and sell it today you would earn a total of  263.00  from holding Eip Growth And or generate 15.04% return on investment over 90 days.

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

Growth Opportunities Fund  vs.  Eip Growth And

Growth Opportunities

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Opportunities Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Growth Opportunities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eip Growth And

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eip Growth And are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Eip Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Growth Opportunities and Eip Growth

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

The idea behind Growth Opportunities Fund and Eip Growth And 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.