Correlation Between Growth Fund and Firsthand Alternative

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Can any of the company-specific risk be diversified away by investing in both Growth Fund and Firsthand Alternative 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 Firsthand Alternative 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 Firsthand Alternative Energy, you can compare the effects of market volatilities on Growth Fund and Firsthand Alternative 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 Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Firsthand Alternative.

Diversification Opportunities for Growth Fund and Firsthand Alternative

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Growth and Firsthand is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative 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 Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Growth Fund i.e., Growth Fund and Firsthand Alternative go up and down completely randomly.

Pair Corralation between Growth Fund and Firsthand Alternative

Assuming the 90 days horizon Growth Fund is expected to generate 4.79 times less return on investment than Firsthand Alternative. But when comparing it to its historical volatility, Growth Fund Of is 1.84 times less risky than Firsthand Alternative. It trades about 0.12 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Firsthand Alternative Energy on February 14, 2024 and sell it today you would earn a total of  107.00  from holding Firsthand Alternative Energy or generate 12.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Growth Fund Of  vs.  Firsthand Alternative Energy

 Performance 
       Timeline  
Growth Fund 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Growth Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Firsthand Alternative 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Firsthand Alternative Energy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Firsthand Alternative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund and Firsthand Alternative Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Growth Fund and Firsthand Alternative

The main advantage of trading using opposite Growth Fund and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's long position.
The idea behind Growth Fund Of and Firsthand Alternative Energy 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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