Correlation Between New Perspective and United Bank
Can any of the company-specific risk be diversified away by investing in both New Perspective and United Bank 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 United Bank 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 The United Bank, you can compare the effects of market volatilities on New Perspective and United Bank 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 United Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and United Bank.
Diversification Opportunities for New Perspective and United Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and United is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and The United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bank 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 United Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bank has no effect on the direction of New Perspective i.e., New Perspective and United Bank go up and down completely randomly.
Pair Corralation between New Perspective and United Bank
Assuming the 90 days horizon New Perspective Fund is expected to under-perform the United Bank. In addition to that, New Perspective is 2.07 times more volatile than The United Bank. It trades about -0.06 of its total potential returns per unit of risk. The United Bank is currently generating about 0.06 per unit of volatility. If you would invest 1,429 in The United Bank on November 4, 2024 and sell it today you would earn a total of 14.00 from holding The United Bank or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
New Perspective Fund vs. The United Bank
Performance |
| Timeline |
| New Perspective |
| United Bank |
New Perspective and United Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and United Bank
The main advantage of trading using opposite New Perspective and United Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, United Bank 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 United Bank will offset losses from the drop in United Bank'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 |
| United Bank vs. Commercial International Bank Egypt | United Bank vs. Reacap Financial Investments | United Bank vs. Cairo Oils Soap | United Bank vs. QALA For Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |