Correlation Between Growth Opportunities and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Growth Allocation 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 Opportunities and Growth Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Growth Allocation Fund, you can compare the effects of market volatilities on Growth Opportunities and Growth Allocation 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 Opportunities with a short position of Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Growth Allocation.
Diversification Opportunities for Growth Opportunities and Growth Allocation
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GROWTH and Growth is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation and Growth Opportunities 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 Opportunities Fund are associated (or correlated) with Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Growth Allocation go up and down completely randomly.
Pair Corralation between Growth Opportunities and Growth Allocation
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 1.95 times more return on investment than Growth Allocation. However, Growth Opportunities is 1.95 times more volatile than Growth Allocation Fund. It trades about 0.13 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.1 per unit of risk. If you would invest 6,194 in Growth Opportunities Fund on August 13, 2025 and sell it today you would earn a total of 510.00 from holding Growth Opportunities Fund or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Growth Allocation Fund
Performance |
| Timeline |
| Growth Opportunities |
| Growth Allocation |
Growth Opportunities and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Growth Allocation
The main advantage of trading using opposite Growth Opportunities and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Growth Allocation 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 Allocation will offset losses from the drop in Growth Allocation's long position.| Growth Opportunities vs. Ab Value Fund | Growth Opportunities vs. Fbanjx | Growth Opportunities vs. Scharf Balanced Opportunity | Growth Opportunities vs. Fa 529 Aggressive |
| Growth Allocation vs. T Rowe Price | Growth Allocation vs. Franklin High Yield | Growth Allocation vs. Multi Manager High Yield | Growth Allocation vs. California High Yield Municipal |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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