Correlation Between Growth Fund and Marshfield Concentrated

Can any of the company-specific risk be diversified away by investing in both Growth Fund and Marshfield 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 Fund and Marshfield Concentrated 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 Marshfield Centrated Opportunity, you can compare the effects of market volatilities on Growth Fund and Marshfield 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 Fund with a short position of Marshfield Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Marshfield Concentrated.

Diversification Opportunities for Growth Fund and Marshfield Concentrated

0.9

Correlation Coefficient

Growth Fund  Marshfield Concentrated

Almost no diversification

The 3 months correlation between Growth and Marshfield is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Marshfield Centrated Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marshfield Concentrated 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 Marshfield Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marshfield Concentrated has no effect on the direction of Growth Fund i.e., Growth Fund and Marshfield Concentrated go up and down completely randomly.

Pair Corralation between Growth Fund and Marshfield Concentrated

Assuming the 90 days horizon Growth Fund Of is expected to generate 2.37 times more return on investment than Marshfield Concentrated. However, Growth Fund is 2.37 times more volatile than Marshfield Centrated Opportunity. It trades about -0.04 of its potential returns per unit of risk. Marshfield Centrated Opportunity is currently generating about -0.14 per unit of risk. If you would invest  6,941  in Growth Fund Of on February 4, 2024 and sell it today you would lose (73.00) from holding Growth Fund Of or give up 1.05% of portfolio value over 90 days.

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

Growth Fund Of  vs.  Marshfield Centrated Opportuni

Growth Fund

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marshfield Concentrated

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marshfield Centrated Opportunity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Marshfield Concentrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Growth Fund and Marshfield Concentrated

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

The idea behind Growth Fund Of and Marshfield Centrated Opportunity 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.