Correlation Between Global Growth and Focused Dynamic

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

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

Diversification Opportunities for Global Growth and Focused Dynamic

-0.29

Correlation Coefficient

Global Growth  Focused Dynamic

Very good diversification

The 3 months correlation between Global and Focused is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Global Growth Fund and Focused Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused Dynamic Growth and Global 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 Global Growth Fund are associated (or correlated) with Focused Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused Dynamic Growth has no effect on the direction of Global Growth i.e., Global Growth and Focused Dynamic go up and down completely randomly.

Pair Corralation between Global Growth and Focused Dynamic

Assuming the 90 days horizon Global Growth Fund is expected to under-perform the Focused Dynamic. In addition to that, Global Growth is 1.54 times more volatile than Focused Dynamic Growth. It trades about -0.16 of its total potential returns per unit of risk. Focused Dynamic Growth is currently generating about 0.21 per unit of volatility. If you would invest  6,246  in Focused Dynamic Growth on September 23, 2024 and sell it today you would earn a total of  823.00  from holding Focused Dynamic Growth or generate 13.18% return on investment over 90 days.

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

Global Growth Fund  vs.  Focused Dynamic Growth

Global Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Focused Dynamic Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Focused Dynamic Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Focused Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Growth and Focused Dynamic

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

The idea behind Global Growth Fund and Focused Dynamic Growth 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.