Correlation Between New Perspective and New Perspective
Can any of the company-specific risk be diversified away by investing in both New Perspective 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 New Perspective and New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on New Perspective 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 New Perspective with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and New Perspective.
Diversification Opportunities for New Perspective and New Perspective
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between New and New is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective 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 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 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 New Perspective i.e., New Perspective and New Perspective go up and down completely randomly.
Pair Corralation between New Perspective and New Perspective
Assuming the 90 days horizon New Perspective Fund is expected to generate 1.0 times more return on investment than New Perspective. However, New Perspective Fund is 1.0 times less risky than New Perspective. It trades about 0.09 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.09 per unit of risk. If you would invest 5,385 in New Perspective Fund on September 2, 2024 and sell it today you would earn a total of 1,030 from holding New Perspective Fund or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. New Perspective Fund
Performance |
| Timeline |
| New Perspective |
| New Perspective |
New Perspective and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and New Perspective
The main advantage of trading using opposite New Perspective and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective 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.| New Perspective vs. Prudential Core Conservative | New Perspective vs. Western Asset Diversified | New Perspective vs. Oppenheimer International Diversified | New Perspective vs. Aqr Diversified Arbitrage |
| New Perspective vs. Jhancock Disciplined Value | New Perspective vs. T Rowe Price | New Perspective vs. Qs Large Cap | New Perspective vs. Strategic Allocation Aggressive |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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