Correlation Between Bond Fund and New Economy
Can any of the company-specific risk be diversified away by investing in both Bond Fund and New Economy 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 Bond Fund and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Of and New Economy Fund, you can compare the effects of market volatilities on Bond Fund and New Economy 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 Bond Fund with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and New Economy.
Diversification Opportunities for Bond Fund and New Economy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bond and New is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Bond Fund 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 Bond Fund Of are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Bond Fund i.e., Bond Fund and New Economy go up and down completely randomly.
Pair Corralation between Bond Fund and New Economy
Assuming the 90 days horizon Bond Fund is expected to generate 1.56 times less return on investment than New Economy. But when comparing it to its historical volatility, Bond Fund Of is 2.82 times less risky than New Economy. It trades about 0.07 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,395 in New Economy Fund on August 30, 2024 and sell it today you would earn a total of 48.00 from holding New Economy Fund or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bond Fund Of vs. New Economy Fund
Performance |
| Timeline |
| Bond Fund |
| New Economy Fund |
Bond Fund and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and New Economy
The main advantage of trading using opposite Bond Fund and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund position performs unexpectedly, New Economy 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 Economy will offset losses from the drop in New Economy's long position.| Bond Fund vs. Income Fund Of | Bond Fund vs. New World Fund | Bond Fund vs. American Mutual Fund | Bond Fund vs. American Mutual Fund |
| New Economy vs. Volumetric Fund Volumetric | New Economy vs. Victory Tax Exempt Fund | New Economy vs. Artisan Thematic Fund | New Economy vs. Eic Value Fund |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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