Correlation Between New Perspective and Geo
Can any of the company-specific risk be diversified away by investing in both New Perspective and Geo 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 Geo 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 Geo Group, you can compare the effects of market volatilities on New Perspective and Geo 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 Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Geo.
Diversification Opportunities for New Perspective and Geo
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Geo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of New Perspective i.e., New Perspective and Geo go up and down completely randomly.
Pair Corralation between New Perspective and Geo
Assuming the 90 days horizon New Perspective is expected to generate 2.63 times less return on investment than Geo. But when comparing it to its historical volatility, New Perspective Fund is 4.17 times less risky than Geo. It trades about 0.26 of its potential returns per unit of risk. Geo Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,829 in Geo Group on November 3, 2024 and sell it today you would earn a total of 317.00 from holding Geo Group or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Geo Group
Performance |
| Timeline |
| New Perspective |
| Geo Group |
New Perspective and Geo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Geo
The main advantage of trading using opposite New Perspective and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Geo 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 Geo will offset losses from the drop in Geo'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |