Correlation Between Aquagold International and New Perspective
Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and New Perspective Fund, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and New Perspective.
Diversification Opportunities for Aquagold International and New Perspective
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aquagold and NEW is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and New Perspective go up and down completely randomly.
Pair Corralation between Aquagold International and New Perspective
Given the investment horizon of 90 days Aquagold International is expected to generate 61.1 times more return on investment than New Perspective. However, Aquagold International is 61.1 times more volatile than New Perspective Fund. It trades about 0.06 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.06 per unit of risk. If you would invest 0.10 in Aquagold International on November 27, 2024 and sell it today you would lose (0.08) from holding Aquagold International or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Aquagold International vs. New Perspective Fund
Performance |
| Timeline |
| Aquagold International |
| New Perspective |
Aquagold International and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquagold International and New Perspective
The main advantage of trading using opposite Aquagold International and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
| New Perspective vs. Hartford Healthcare Hls | New Perspective vs. Putnam Global Health | New Perspective vs. Lord Abbett Health | New Perspective vs. Baron Health Care |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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