Correlation Between Select Us and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Select Us 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 Select Us and Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Growth Strategy Fund, you can compare the effects of market volatilities on Select Us 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 Select Us with a short position of Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Us and Growth Strategy.
Diversification Opportunities for Select Us and Growth Strategy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Growth is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Select 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 Select Us 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 Select 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 Select Us i.e., Select Us and Growth Strategy go up and down completely randomly.
Pair Corralation between Select Us and Growth Strategy
Assuming the 90 days horizon Select Equity Fund is expected to generate 1.52 times more return on investment than Growth Strategy. However, Select Us is 1.52 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 0.03 per unit of risk. If you would invest 1,498 in Select Equity Fund on March 25, 2025 and sell it today you would earn a total of 52.00 from holding Select Equity Fund or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Equity Fund vs. Growth Strategy Fund
Performance |
| Timeline |
| Select Equity |
| Growth Strategy |
Select Us and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Us and Growth Strategy
The main advantage of trading using opposite Select Us and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Us 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.| Select Us vs. Janus Global Technology | Select Us vs. Dreyfus Technology Growth | Select Us vs. Firsthand Technology Opportunities | Select Us vs. Mfs Technology Fund |
| Growth Strategy vs. Fidelity Capital Income | Growth Strategy vs. Prudential High Yield | Growth Strategy vs. Strategic Advisers Income | Growth Strategy vs. Calvert High Yield |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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