Correlation Between Growth Fund and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Stone Harbor 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 Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Stone Harbor Emerging, you can compare the effects of market volatilities on Growth Fund and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Stone Harbor.
Diversification Opportunities for Growth Fund and Stone Harbor
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Stone is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Stone Harbor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Emerging 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 Of are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Emerging has no effect on the direction of Growth Fund i.e., Growth Fund and Stone Harbor go up and down completely randomly.
Pair Corralation between Growth Fund and Stone Harbor
Assuming the 90 days horizon Growth Fund Of is expected to under-perform the Stone Harbor. In addition to that, Growth Fund is 1.16 times more volatile than Stone Harbor Emerging. It trades about -0.16 of its total potential returns per unit of risk. Stone Harbor Emerging is currently generating about -0.04 per unit of volatility. If you would invest 470.00 in Stone Harbor Emerging on January 25, 2024 and sell it today you would lose (4.00) from holding Stone Harbor Emerging or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Stone Harbor Emerging
Performance |
| Timeline |
| Growth Fund |
| Stone Harbor Emerging |
Growth Fund and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Stone Harbor
The main advantage of trading using opposite Growth Fund and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Growth Fund vs. Amana Income Fund | Growth Fund vs. Amana Income Fund | Growth Fund vs. Amana Developing World | Growth Fund vs. Amana Developing World |
| Stone Harbor vs. Vanguard Total Stock | Stone Harbor vs. Vanguard 500 Index | Stone Harbor vs. Vanguard Total Stock | Stone Harbor vs. Vanguard Total Stock |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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