Correlation Between Growth Fund and One Choice

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Can any of the company-specific risk be diversified away by investing in both Growth Fund and One Choice 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 One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Investor and One Choice 2030, you can compare the effects of market volatilities on Growth Fund and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and One Choice.

Diversification Opportunities for Growth Fund and One Choice

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Growth and One is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Investor and One Choice 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2030 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 Investor are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2030 has no effect on the direction of Growth Fund i.e., Growth Fund and One Choice go up and down completely randomly.

Pair Corralation between Growth Fund and One Choice

Assuming the 90 days horizon Growth Fund Investor is expected to generate 2.29 times more return on investment than One Choice. However, Growth Fund is 2.29 times more volatile than One Choice 2030. It trades about 0.11 of its potential returns per unit of risk. One Choice 2030 is currently generating about 0.08 per unit of risk. If you would invest  3,634  in Growth Fund Investor on September 7, 2024 and sell it today you would earn a total of  2,653  from holding Growth Fund Investor or generate 73.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Growth Fund Investor  vs.  One Choice 2030

 Performance 
       Timeline  
Growth Fund Investor 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Investor are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Fund showed solid returns over the last few months and may actually be approaching a breakup point.
One Choice 2030 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in One Choice 2030 are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, One Choice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund and One Choice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Growth Fund and One Choice

The main advantage of trading using opposite Growth Fund and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.
The idea behind Growth Fund Investor and One Choice 2030 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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