Correlation Between Intermediate-term and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Intermediate-term and Equity Growth 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 Intermediate-term and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Term Tax Free Bond and The Equity Growth, you can compare the effects of market volatilities on Intermediate-term and Equity Growth 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 Intermediate-term with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Equity Growth.
Diversification Opportunities for Intermediate-term and Equity Growth
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intermediate-term and Equity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Tax Free Bon and The Equity Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and Intermediate-term 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 Intermediate Term Tax Free Bond are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Intermediate-term i.e., Intermediate-term and Equity Growth go up and down completely randomly.
Pair Corralation between Intermediate-term and Equity Growth
Assuming the 90 days horizon Intermediate-term is expected to generate 24.58 times less return on investment than Equity Growth. But when comparing it to its historical volatility, Intermediate Term Tax Free Bond is 9.72 times less risky than Equity Growth. It trades about 0.13 of its potential returns per unit of risk. The Equity Growth is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,349 in The Equity Growth on April 23, 2025 and sell it today you would earn a total of 683.00 from holding The Equity Growth or generate 29.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Tax Free Bon vs. The Equity Growth
Performance |
| Timeline |
| Intermediate Term Tax |
| Equity Growth |
Intermediate-term and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate-term and Equity Growth
The main advantage of trading using opposite Intermediate-term and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate-term position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Intermediate-term vs. Nuveen Short Term | Intermediate-term vs. Astor Longshort Fund | Intermediate-term vs. Lord Abbett Short | Intermediate-term vs. The Short Term Municipal |
| Equity Growth vs. Jhancock Global Equity | Equity Growth vs. Harding Loevner Global | Equity Growth vs. Franklin Mutual Global | Equity Growth vs. Gmo Global Equity |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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