Correlation Between Growth Income and Global Social

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

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

Diversification Opportunities for Growth Income and Global Social

-0.62

Correlation Coefficient

Growth Income  Global Social

Excellent diversification

The 3 months correlation between Growth and Global is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Growth Income Fund and Global Social Awareness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Social Awareness and Growth Income 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 Income Fund are associated (or correlated) with Global Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Social Awareness has no effect on the direction of Growth Income i.e., Growth Income and Global Social go up and down completely randomly.

Pair Corralation between Growth Income and Global Social

Assuming the 90 days horizon Growth Income Fund is expected to generate 0.86 times more return on investment than Global Social. However, Growth Income Fund is 1.17 times less risky than Global Social. It trades about 0.21 of its potential returns per unit of risk. Global Social Awareness is currently generating about -0.07 per unit of risk. If you would invest  3,191  in Growth Income Fund on September 2, 2024 and sell it today you would earn a total of  314.00  from holding Growth Income Fund or generate 9.84% return on investment over 90 days.

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

Growth Income Fund  vs.  Global Social Awareness

Growth Income

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Income 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 Income may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Social Awareness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Social Awareness has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Social 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 Income and Global Social

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

The idea behind Growth Income Fund and Global Social Awareness 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.