Correlation Between New Perspective and Central Japan
Can any of the company-specific risk be diversified away by investing in both New Perspective and Central Japan 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 Central Japan 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 Central Japan Railway, you can compare the effects of market volatilities on New Perspective and Central Japan 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 Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Central Japan.
Diversification Opportunities for New Perspective and Central Japan
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Central is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan Railway 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 Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of New Perspective i.e., New Perspective and Central Japan go up and down completely randomly.
Pair Corralation between New Perspective and Central Japan
If you would invest 2,559 in Central Japan Railway on October 24, 2024 and sell it today you would earn a total of 0.00 from holding Central Japan Railway or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.23% |
| Values | Daily Returns |
New Perspective Fund vs. Central Japan Railway
Performance |
| Timeline |
| New Perspective |
| Central Japan Railway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New Perspective and Central Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Central Japan
The main advantage of trading using opposite New Perspective and Central Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Central Japan 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 Central Japan will offset losses from the drop in Central Japan'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 |
| Central Japan vs. West Japan Railway | Central Japan vs. Central Japan Railway | Central Japan vs. LB Foster |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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