Correlation Between New Perspective and GT Capital
Can any of the company-specific risk be diversified away by investing in both New Perspective and GT Capital 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 GT Capital 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 GT Capital Holdings, you can compare the effects of market volatilities on New Perspective and GT Capital 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 GT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and GT Capital.
Diversification Opportunities for New Perspective and GT Capital
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and GTCAP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and GT Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Capital Holdings 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 GT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Capital Holdings has no effect on the direction of New Perspective i.e., New Perspective and GT Capital go up and down completely randomly.
Pair Corralation between New Perspective and GT Capital
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.46 times more return on investment than GT Capital. However, New Perspective Fund is 2.19 times less risky than GT Capital. It trades about 0.26 of its potential returns per unit of risk. GT Capital Holdings is currently generating about -0.68 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 Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
New Perspective Fund vs. GT Capital Holdings
Performance |
| Timeline |
| New Perspective |
| GT Capital Holdings |
New Perspective and GT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and GT Capital
The main advantage of trading using opposite New Perspective and GT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, GT Capital 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 GT Capital will offset losses from the drop in GT Capital'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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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