Correlation Between Short Duration and New Perspective
Can any of the company-specific risk be diversified away by investing in both Short Duration and New Perspective 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 Short Duration and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and New Perspective Fund, you can compare the effects of market volatilities on Short Duration and New Perspective 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 Short Duration with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and New Perspective.
Diversification Opportunities for Short Duration and New Perspective
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Short and New is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Short Duration 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 Short Duration Inflation are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Short Duration i.e., Short Duration and New Perspective go up and down completely randomly.
Pair Corralation between Short Duration and New Perspective
Assuming the 90 days horizon Short Duration is expected to generate 3.41 times less return on investment than New Perspective. But when comparing it to its historical volatility, Short Duration Inflation is 5.77 times less risky than New Perspective. It trades about 0.13 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,361 in New Perspective Fund on November 9, 2024 and sell it today you would earn a total of 977.00 from holding New Perspective Fund or generate 18.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. New Perspective Fund
Performance |
| Timeline |
| Short Duration Inflation |
| New Perspective |
Short Duration and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and New Perspective
The main advantage of trading using opposite Short Duration and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Short Duration vs. Inflation Adjusted Bond Fund | Short Duration vs. Diversified Bond Fund | Short Duration vs. Short Duration Fund | Short Duration vs. Core Plus Fund |
| New Perspective vs. Intermediate Government Bond | New Perspective vs. Jpmorgan Government Bond | New Perspective vs. Fidelity Series Government | New Perspective vs. Goldman Sachs Government |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |