Correlation Between International Growth and Value Fund
Can any of the company-specific risk be diversified away by investing in both International Growth and Value 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 International Growth and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Growth Fund and Value Fund A, you can compare the effects of market volatilities on International Growth and Value 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 International Growth with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Value Fund.
Diversification Opportunities for International Growth and Value Fund
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Value is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Value Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund A and International 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 International Growth Fund are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund A has no effect on the direction of International Growth i.e., International Growth and Value Fund go up and down completely randomly.
Pair Corralation between International Growth and Value Fund
Assuming the 90 days horizon International Growth Fund is expected to generate 0.68 times more return on investment than Value Fund. However, International Growth Fund is 1.47 times less risky than Value Fund. It trades about -0.16 of its potential returns per unit of risk. Value Fund A is currently generating about -0.13 per unit of risk. If you would invest 1,332 in International Growth Fund on September 24, 2024 and sell it today you would lose (114.00) from holding International Growth Fund or give up 8.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
International Growth Fund vs. Value Fund A
Performance |
Timeline |
International Growth |
Value Fund A |
International Growth and Value Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Growth and Value Fund
The main advantage of trading using opposite International Growth and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Value 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 Value Fund will offset losses from the drop in Value Fund's long position.International Growth vs. Value Fund Investor | International Growth vs. Ultra Fund Investor | International Growth vs. Growth Fund Investor | International Growth vs. Income Growth Fund |
Value Fund vs. Ultra Fund I | Value Fund vs. Equity Growth Fund | Value Fund vs. International Growth Fund | Value Fund vs. Growth Fund I |
Check out your portfolio center.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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