Correlation Between Equity Growth and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Growth Strategy 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 Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Strategy and Growth Strategy Fund, you can compare the effects of market volatilities on Equity Growth and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Growth Strategy.
Diversification Opportunities for Equity Growth and Growth Strategy
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Equity and Growth is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Strategy and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Strategy are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Equity Growth i.e., Equity Growth and Growth Strategy go up and down completely randomly.
Pair Corralation between Equity Growth and Growth Strategy
Assuming the 90 days horizon Equity Growth Strategy is expected to generate 1.1 times more return on investment than Growth Strategy. However, Equity Growth is 1.1 times more volatile than Growth Strategy Fund. It trades about 0.04 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.04 per unit of risk. If you would invest 1,817 in Equity Growth Strategy on September 4, 2025 and sell it today you would earn a total of 10.00 from holding Equity Growth Strategy or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Strategy vs. Growth Strategy Fund
Performance |
| Timeline |
| Equity Growth Strategy |
| Growth Strategy |
Equity Growth and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Growth Strategy
The main advantage of trading using opposite Equity Growth and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Growth Strategy 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 Strategy will offset losses from the drop in Growth Strategy's long position.| Equity Growth vs. International Developed Markets | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate |
| Growth Strategy vs. International Investors Gold | Growth Strategy vs. Global Gold Fund | Growth Strategy vs. Gamco Global Gold | Growth Strategy vs. Goldman Sachs Clean |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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