Correlation Between Multifactor Equity and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Multifactor Equity 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 Multifactor Equity and Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multifactor Equity Fund and Growth Strategy Fund, you can compare the effects of market volatilities on Multifactor Equity 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 Multifactor Equity with a short position of Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multifactor Equity and Growth Strategy.
Diversification Opportunities for Multifactor Equity and Growth Strategy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Multifactor and Growth is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Multifactor Equity Fund and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and Multifactor Equity 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 Multifactor Equity Fund 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 Multifactor Equity i.e., Multifactor Equity and Growth Strategy go up and down completely randomly.
Pair Corralation between Multifactor Equity and Growth Strategy
Assuming the 90 days horizon Multifactor Equity Fund is expected to under-perform the Growth Strategy. In addition to that, Multifactor Equity is 2.87 times more volatile than Growth Strategy Fund. It trades about -0.1 of its total potential returns per unit of risk. Growth Strategy Fund is currently generating about -0.06 per unit of volatility. If you would invest 1,384 in Growth Strategy Fund on September 25, 2025 and sell it today you would lose (72.00) from holding Growth Strategy Fund or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multifactor Equity Fund vs. Growth Strategy Fund
Performance |
| Timeline |
| Multifactor Equity |
| Growth Strategy |
Multifactor Equity and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multifactor Equity and Growth Strategy
The main advantage of trading using opposite Multifactor Equity and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multifactor Equity 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.| Multifactor Equity vs. Hennessy Bp Energy | Multifactor Equity vs. Adams Natural Resources | Multifactor Equity vs. Vanguard Energy Index | Multifactor Equity vs. Gamco Natural Resources |
| Growth Strategy vs. Fidelity Small Cap | Growth Strategy vs. Foundry Partners Fundamental | Growth Strategy vs. Pace Smallmedium Value | Growth Strategy vs. Hennessy Nerstone Mid |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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