Correlation Between Amana Growth and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Amana Growth and Vanguard 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 Amana Growth and Vanguard Growth 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 Vanguard Growth Index, you can compare the effects of market volatilities on Amana Growth and Vanguard 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 Amana Growth with a short position of Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Growth and Vanguard Growth.
Diversification Opportunities for Amana Growth and Vanguard Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amana and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Amana Growth Fund and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Amana Growth i.e., Amana Growth and Vanguard Growth go up and down completely randomly.
Pair Corralation between Amana Growth and Vanguard Growth
Assuming the 90 days horizon Amana Growth Fund is expected to under-perform the Vanguard Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amana Growth Fund is 1.1 times less risky than Vanguard Growth. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Vanguard Growth Index is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 17,535 in Vanguard Growth Index on January 17, 2024 and sell it today you would lose (297.00) from holding Vanguard Growth Index or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amana Growth Fund vs. Vanguard Growth Index
Performance |
| Timeline |
| Amana Growth |
| Vanguard Growth Index |
Amana Growth and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amana Growth and Vanguard Growth
The main advantage of trading using opposite Amana Growth and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Growth position performs unexpectedly, Vanguard 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 Vanguard Growth will offset losses from the drop in Vanguard Growth's long position.| Amana Growth vs. Amana Developing World | Amana Growth vs. Amana Developing World | Amana Growth vs. Amana Income Fund | Amana Growth vs. Amana Participation Fund |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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