Correlation Between Growth Fund and International Government
Can any of the company-specific risk be diversified away by investing in both Growth Fund and International Government 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 Fund and International Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund C and International Government Bond, you can compare the effects of market volatilities on Growth Fund and International Government 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 Fund with a short position of International Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and International Government.
Diversification Opportunities for Growth Fund and International Government
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GROWTH and International is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund C and International Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Government and Growth Fund 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 Fund C are associated (or correlated) with International Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Government has no effect on the direction of Growth Fund i.e., Growth Fund and International Government go up and down completely randomly.
Pair Corralation between Growth Fund and International Government
Assuming the 90 days horizon Growth Fund C is expected to generate 2.53 times more return on investment than International Government. However, Growth Fund is 2.53 times more volatile than International Government Bond. It trades about 0.14 of its potential returns per unit of risk. International Government Bond is currently generating about 0.03 per unit of risk. If you would invest 5,056 in Growth Fund C on June 7, 2025 and sell it today you would earn a total of 116.00 from holding Growth Fund C or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund C vs. International Government Bond
Performance |
| Timeline |
| Growth Fund C |
| International Government |
Growth Fund and International Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and International Government
The main advantage of trading using opposite Growth Fund and International Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, International Government 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 International Government will offset losses from the drop in International Government's long position.| Growth Fund vs. Harding Loevner Emerging | Growth Fund vs. Ep Emerging Markets | Growth Fund vs. Investec Emerging Markets | Growth Fund vs. Franklin Emerging Market |
| International Government vs. Inflation Adjusted Bond Fund | International Government vs. Ab Bond Inflation | International Government vs. Goldman Sachs Inflation | International Government vs. T Rowe Price |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |