Correlation Between Growth Strategy and Global Concentrated

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

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

Diversification Opportunities for Growth Strategy and Global Concentrated

0.81

Correlation Coefficient

Growth Strategy  Global Concentrated

Very poor diversification

The 3 months correlation between GROWTH and Global is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por and Growth Strategy 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 Strategy Fund are associated (or correlated) with Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Growth Strategy i.e., Growth Strategy and Global Concentrated go up and down completely randomly.

Pair Corralation between Growth Strategy and Global Concentrated

Assuming the 90 days horizon Growth Strategy is expected to generate 1.48 times less return on investment than Global Concentrated. But when comparing it to its historical volatility, Growth Strategy Fund is 1.69 times less risky than Global Concentrated. It trades about 0.34 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,355  in Global Centrated Portfolio on September 4, 2024 and sell it today you would earn a total of  123.00  from holding Global Centrated Portfolio or generate 5.22% return on investment over 90 days.

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

Growth Strategy Fund  vs.  Global Centrated Portfolio

Growth Strategy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Strategy Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. 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.

Global Centrated Por

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Centrated Portfolio are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Concentrated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Growth Strategy and Global Concentrated

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

The idea behind Growth Strategy Fund and Global Centrated Portfolio 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.