Correlation Between Growth Fund and Iman Fund

Can any of the company-specific risk be diversified away by investing in both Growth Fund and Iman Fund 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 Iman Fund 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 Iman Fund Class, you can compare the effects of market volatilities on Growth Fund and Iman Fund 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 Iman Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Iman Fund.

Diversification Opportunities for Growth Fund and Iman Fund

0.94

Correlation Coefficient

Growth Fund  Iman Fund

Almost no diversification

The 3 months correlation between Growth and Iman is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Iman Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iman Fund Class 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 Iman Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iman Fund Class has no effect on the direction of Growth Fund i.e., Growth Fund and Iman Fund go up and down completely randomly.

Pair Corralation between Growth Fund and Iman Fund

Assuming the 90 days horizon Growth Fund Of is expected to generate 1.07 times more return on investment than Iman Fund. However, Growth Fund is 1.07 times more volatile than Iman Fund Class. It trades about 0.22 of its potential returns per unit of risk. Iman Fund Class is currently generating about 0.14 per unit of risk. If you would invest  7,268  in Growth Fund Of on September 2, 2024 and sell it today you would earn a total of  908.00  from holding Growth Fund Of or generate 12.49% return on investment over 90 days.

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

Growth Fund Of  vs.  Iman Fund Class

Growth Fund

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Iman Fund Class

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iman Fund Class are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Iman Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Growth Fund and Iman Fund

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

The idea behind Growth Fund Of and Iman Fund Class 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.