Correlation Between New Perspective and Arctic Gold
Can any of the company-specific risk be diversified away by investing in both New Perspective and Arctic Gold 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 New Perspective and Arctic Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Arctic Gold Publ, you can compare the effects of market volatilities on New Perspective and Arctic Gold 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 New Perspective with a short position of Arctic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Arctic Gold.
Diversification Opportunities for New Perspective and Arctic Gold
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Arctic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ and New Perspective 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 New Perspective Fund are associated (or correlated) with Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of New Perspective i.e., New Perspective and Arctic Gold go up and down completely randomly.
Pair Corralation between New Perspective and Arctic Gold
Assuming the 90 days horizon New Perspective is expected to generate 2.49 times less return on investment than Arctic Gold. But when comparing it to its historical volatility, New Perspective Fund is 7.67 times less risky than Arctic Gold. It trades about 0.06 of its potential returns per unit of risk. Arctic Gold Publ is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Arctic Gold Publ on November 3, 2024 and sell it today you would lose (5.00) from holding Arctic Gold Publ or give up 17.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
New Perspective Fund vs. Arctic Gold Publ
Performance |
| Timeline |
| New Perspective |
| Arctic Gold Publ |
New Perspective and Arctic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Arctic Gold
The main advantage of trading using opposite New Perspective and Arctic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Arctic Gold 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 Arctic Gold will offset losses from the drop in Arctic Gold's long position.| New Perspective vs. Growth Fund Of | New Perspective vs. American Funds Fundamental | New Perspective vs. Investment Of America | New Perspective vs. Smallcap World Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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