Correlation Between New Perspective and Tri Continental
Can any of the company-specific risk be diversified away by investing in both New Perspective and Tri Continental 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 Tri Continental 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 Tri Continental Closed, you can compare the effects of market volatilities on New Perspective and Tri Continental 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 Tri Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Tri Continental.
Diversification Opportunities for New Perspective and Tri Continental
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Tri is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Tri Continental Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental Closed 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 Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental Closed has no effect on the direction of New Perspective i.e., New Perspective and Tri Continental go up and down completely randomly.
Pair Corralation between New Perspective and Tri Continental
Assuming the 90 days horizon New Perspective Fund is expected to generate 1.25 times more return on investment than Tri Continental. However, New Perspective is 1.25 times more volatile than Tri Continental Closed. It trades about 0.26 of its potential returns per unit of risk. Tri Continental Closed is currently generating about 0.31 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Tri Continental Closed
Performance |
| Timeline |
| New Perspective |
| Tri Continental Closed |
New Perspective and Tri Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Tri Continental
The main advantage of trading using opposite New Perspective and Tri Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Tri Continental 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 Tri Continental will offset losses from the drop in Tri Continental'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 |
| Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Blackrock Muniyield | Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Eaton Vance Tax |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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