Correlation Between Enhanced Fixed and New Economy
Can any of the company-specific risk be diversified away by investing in both Enhanced Fixed and New Economy 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 Enhanced Fixed and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Fixed Income and New Economy Fund, you can compare the effects of market volatilities on Enhanced Fixed and New Economy 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 Enhanced Fixed with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced Fixed and New Economy.
Diversification Opportunities for Enhanced Fixed and New Economy
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enhanced and New is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Fixed Income and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Enhanced Fixed 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 Enhanced Fixed Income are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Enhanced Fixed i.e., Enhanced Fixed and New Economy go up and down completely randomly.
Pair Corralation between Enhanced Fixed and New Economy
Assuming the 90 days horizon Enhanced Fixed is expected to generate 2.73 times less return on investment than New Economy. But when comparing it to its historical volatility, Enhanced Fixed Income is 3.55 times less risky than New Economy. It trades about 0.29 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,308 in New Economy Fund on November 9, 2024 and sell it today you would earn a total of 292.00 from holding New Economy Fund or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Fixed Income vs. New Economy Fund
Performance |
| Timeline |
| Enhanced Fixed Income |
| New Economy Fund |
Enhanced Fixed and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced Fixed and New Economy
The main advantage of trading using opposite Enhanced Fixed and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced Fixed position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Enhanced Fixed vs. Bbh Partner Fund | Enhanced Fixed vs. Intermediate Term Tax Free Bond | Enhanced Fixed vs. Rbc Funds Trust | Enhanced Fixed vs. T Rowe Price |
| New Economy vs. Sierra E Retirement | New Economy vs. Dimensional Retirement Income | New Economy vs. Tiaa Cref Lifestyle Moderate | New Economy vs. Tiaa Cref Lifecycle Retirement |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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