Correlation Between New Perspective and Golden House
Can any of the company-specific risk be diversified away by investing in both New Perspective and Golden House 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 Golden House 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 Golden House, you can compare the effects of market volatilities on New Perspective and Golden House 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 Golden House. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Golden House.
Diversification Opportunities for New Perspective and Golden House
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Golden is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Golden House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden House 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 Golden House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden House has no effect on the direction of New Perspective i.e., New Perspective and Golden House go up and down completely randomly.
Pair Corralation between New Perspective and Golden House
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.48 times more return on investment than Golden House. However, New Perspective Fund is 2.1 times less risky than Golden House. It trades about 0.26 of its potential returns per unit of risk. Golden House is currently generating about 0.02 per unit of risk. If you would invest 6,202 in New Perspective Fund on November 3, 2024 and sell it today you would earn a total of 280.00 from holding New Perspective Fund or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
New Perspective Fund vs. Golden House
Performance |
| Timeline |
| New Perspective |
| Golden House |
New Perspective and Golden House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Golden House
The main advantage of trading using opposite New Perspective and Golden House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Golden House 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 Golden House will offset losses from the drop in Golden House'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 |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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