Correlation Between Growth Allocation and Science Technology

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

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

Diversification Opportunities for Growth Allocation and Science Technology

0.97

Correlation Coefficient

Growth Allocation  Science Technology

Almost no diversification

The 3 months correlation between Growth and Science is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology and Growth Allocation 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 Allocation Fund are associated (or correlated) with Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Growth Allocation i.e., Growth Allocation and Science Technology go up and down completely randomly.

Pair Corralation between Growth Allocation and Science Technology

Assuming the 90 days horizon Growth Allocation is expected to generate 1.87 times less return on investment than Science Technology. But when comparing it to its historical volatility, Growth Allocation Fund is 2.14 times less risky than Science Technology. It trades about 0.24 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,275  in Science Technology Fund on May 22, 2025 and sell it today you would earn a total of  431.00  from holding Science Technology Fund or generate 13.16% return on investment over 90 days.

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

Growth Allocation Fund  vs.  Science Technology Fund

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 18 (%) 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.

Science Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Science Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Growth Allocation and Science Technology

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

The idea behind Growth Allocation Fund and Science Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.