Correlation Between Amana Growth and Growth Fund

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Can any of the company-specific risk be diversified away by investing in both Amana Growth and Growth Fund 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 Amana Growth and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Growth Fund and Growth Fund Of, you can compare the effects of market volatilities on Amana Growth and Growth Fund 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 Amana Growth with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Growth and Growth Fund.

Diversification Opportunities for Amana Growth and Growth Fund

0.98
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Amana and Growth is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding AMANA GROWTH FUND and GROWTH FUND OF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Amana Growth 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 Amana Growth Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Amana Growth i.e., Amana Growth and Growth Fund go up and down completely randomly.

Pair Corralation between Amana Growth and Growth Fund

Assuming the 90 days horizon Amana Growth Fund is expected to generate 0.8 times more return on investment than Growth Fund. However, Amana Growth Fund is 1.25 times less risky than Growth Fund. It trades about 0.05 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.04 per unit of risk. If you would invest  6,245  in Amana Growth Fund on December 29, 2023 and sell it today you would earn a total of  1,702  from holding Amana Growth Fund or generate 27.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AMANA GROWTH FUND  vs.  GROWTH FUND OF

 Performance 
       Timeline  
Amana Growth Fund 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amana Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Amana Growth may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Growth Fund 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Amana Growth and Growth Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amana Growth and Growth Fund

The main advantage of trading using opposite Amana Growth and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Growth position performs unexpectedly, Growth Fund 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 Fund will offset losses from the drop in Growth Fund's long position.
The idea behind Amana Growth Fund and Growth Fund Of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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