Correlation Between Equity Growth and Select Fund

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

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

Diversification Opportunities for Equity Growth and Select Fund

0.82

Correlation Coefficient

Equity Growth  Select Fund

Very poor diversification

The 3 months correlation between Equity and Select is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Select Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund A and Equity 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 Equity Growth Fund are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund A has no effect on the direction of Equity Growth i.e., Equity Growth and Select Fund go up and down completely randomly.

Pair Corralation between Equity Growth and Select Fund

Assuming the 90 days horizon Equity Growth Fund is expected to generate 0.79 times more return on investment than Select Fund. However, Equity Growth Fund is 1.26 times less risky than Select Fund. It trades about 0.13 of its potential returns per unit of risk. Select Fund A is currently generating about 0.08 per unit of risk. If you would invest  3,719  in Equity Growth Fund on September 11, 2025 and sell it today you would earn a total of  239.00  from holding Equity Growth Fund or generate 6.43% return on investment over 90 days.

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

Equity Growth Fund  vs.  Select Fund A

Equity Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Growth Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Equity Growth may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Select Fund A

Risk-Adjusted Performance

Mild

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

Pair Trading with Equity Growth and Select Fund

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

The idea behind Equity Growth Fund and Select Fund A 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.