Correlation Between Aggressive Growth and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Growth 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 Aggressive Growth and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Fund and Growth Fund Of, you can compare the effects of market volatilities on Aggressive Growth and Growth 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 Aggressive Growth with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Growth Fund.
Diversification Opportunities for Aggressive Growth and Growth Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aggressive and Growth is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding AGGRESSIVE GROWTH FUND and GROWTH FUND OF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Aggressive 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 Aggressive Growth Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Growth Fund go up and down completely randomly.
Pair Corralation between Aggressive Growth and Growth Fund
Assuming the 90 days horizon Aggressive Growth Fund is expected to generate 1.01 times more return on investment than Growth Fund. However, Aggressive Growth is 1.01 times more volatile than Growth Fund Of. It trades about 0.11 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.09 per unit of risk. If you would invest 3,793 in Aggressive Growth Fund on December 29, 2023 and sell it today you would earn a total of 2,364 from holding Aggressive Growth Fund or generate 62.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AGGRESSIVE GROWTH FUND vs. GROWTH FUND OF
Performance |
Timeline |
Aggressive Growth Fund |
Growth Fund |
Aggressive Growth and Growth Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aggressive Growth and Growth Fund
The main advantage of trading using opposite Aggressive Growth and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Growth 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 Growth Fund will offset losses from the drop in Growth Fund's long position.Aggressive Growth vs. Capital Growth Fund | Aggressive Growth vs. Emerging Markets Fund | Aggressive Growth vs. High Income Fund | Aggressive Growth vs. International Fund International |
Growth Fund vs. Income Fund Of | Growth Fund vs. American Funds 2015 | Growth Fund vs. American Mutual Fund | Growth Fund vs. American Mutual Fund |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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