Correlation Between Auer Growth and Growth Allocation

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

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

Diversification Opportunities for Auer Growth and Growth Allocation

0.95

Correlation Coefficient

Auer Growth  Growth Allocation

Almost no diversification

The 3 months correlation between Auer and Growth is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation and Auer 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 Auer Growth Fund are associated (or correlated) with Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Auer Growth i.e., Auer Growth and Growth Allocation go up and down completely randomly.

Pair Corralation between Auer Growth and Growth Allocation

Assuming the 90 days horizon Auer Growth Fund is expected to generate 1.64 times more return on investment than Growth Allocation. However, Auer Growth is 1.64 times more volatile than Growth Allocation Fund. It trades about 0.23 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.23 per unit of risk. If you would invest  1,277  in Auer Growth Fund on May 7, 2025 and sell it today you would earn a total of  159.00  from holding Auer Growth Fund or generate 12.45% return on investment over 90 days.

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

Auer Growth Fund  vs.  Growth Allocation Fund

Auer Growth Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Auer Growth Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Auer Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Growth Allocation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Allocation Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Growth Allocation may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Auer Growth and Growth Allocation

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

The idea behind Auer Growth Fund and Growth Allocation Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.