Correlation Between Chase Growth and New Perspective
Can any of the company-specific risk be diversified away by investing in both Chase Growth 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 Chase Growth and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chase Growth Fund and New Perspective Fund, you can compare the effects of market volatilities on Chase Growth 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 Chase Growth with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chase Growth and New Perspective.
Diversification Opportunities for Chase Growth and New Perspective
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chase and New is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chase Growth Fund and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Chase Growth 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 Chase Growth Fund 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 Chase Growth i.e., Chase Growth and New Perspective go up and down completely randomly.
Pair Corralation between Chase Growth and New Perspective
Assuming the 90 days horizon Chase Growth Fund is expected to generate 1.18 times more return on investment than New Perspective. However, Chase Growth is 1.18 times more volatile than New Perspective Fund. It trades about 0.26 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.11 per unit of risk. If you would invest 1,541 in Chase Growth Fund on September 2, 2024 and sell it today you would earn a total of 228.00 from holding Chase Growth Fund or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chase Growth Fund vs. New Perspective Fund
Performance |
| Timeline |
| Chase Growth |
| New Perspective |
Chase Growth and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chase Growth and New Perspective
The main advantage of trading using opposite Chase Growth and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chase Growth 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.| Chase Growth vs. The Chesapeake Growth | Chase Growth vs. Aston Montag Caldwell | Chase Growth vs. Cambiar Opportunity Fund | Chase Growth vs. Amg Managers Brandywine |
| New Perspective vs. Small Pany Growth | New Perspective vs. Qs Growth Fund | New Perspective vs. Chase Growth Fund | New Perspective vs. Legg Mason Partners |
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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