Correlation Between Growth Allocation and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both Growth Allocation and Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on Growth Allocation and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Smallcap Growth.
Diversification Opportunities for Growth Allocation and Smallcap Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Smallcap is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Growth Allocation i.e., Growth Allocation and Smallcap Growth go up and down completely randomly.
Pair Corralation between Growth Allocation and Smallcap Growth
Assuming the 90 days horizon Growth Allocation is expected to generate 1.5 times less return on investment than Smallcap Growth. But when comparing it to its historical volatility, Growth Allocation Fund is 2.3 times less risky than Smallcap Growth. It trades about 0.15 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,510 in Smallcap Growth Fund on July 21, 2025 and sell it today you would earn a total of 110.00 from holding Smallcap Growth Fund or generate 7.28% 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. Smallcap Growth Fund
Performance |
| Timeline |
| Growth Allocation |
| Smallcap Growth |
Growth Allocation and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Smallcap Growth
The main advantage of trading using opposite Growth Allocation and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth's long position.| Growth Allocation vs. Dreyfus Technology Growth | Growth Allocation vs. Janus Global Technology | Growth Allocation vs. Icon Information Technology | Growth Allocation vs. Columbia Global Technology |
| Smallcap Growth vs. Alternative Asset Allocation | Smallcap Growth vs. Oppenheimer Global Allocation | Smallcap Growth vs. Forward Balanced Allocation | Smallcap Growth vs. Growth Allocation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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