Correlation Between Elfun Government and New Economy
Can any of the company-specific risk be diversified away by investing in both Elfun Government 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 Elfun Government and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and New Economy Fund, you can compare the effects of market volatilities on Elfun Government 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 Elfun Government with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and New Economy.
Diversification Opportunities for Elfun Government and New Economy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Elfun and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money 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 Elfun Government 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 Elfun Government Money 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 Elfun Government i.e., Elfun Government and New Economy go up and down completely randomly.
Pair Corralation between Elfun Government and New Economy
Assuming the 90 days horizon Elfun Government is expected to generate 9.85 times less return on investment than New Economy. But when comparing it to its historical volatility, Elfun Government Money is 5.27 times less risky than New Economy. It trades about 0.04 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,475 in New Economy Fund on September 14, 2024 and sell it today you would earn a total of 523.00 from holding New Economy Fund or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 96.92% |
| Values | Daily Returns |
Elfun Government Money vs. New Economy Fund
Performance |
| Timeline |
| Elfun Government Money |
| New Economy Fund |
Elfun Government and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elfun Government and New Economy
The main advantage of trading using opposite Elfun Government and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government 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.| Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard 500 Index | Elfun Government vs. Vanguard Total Stock | Elfun Government vs. Vanguard Total Stock |
| New Economy vs. Easterly Snow Longshort | New Economy vs. Barings Active Short | New Economy vs. Blackrock Short Term Inflat Protected | New Economy vs. Lord Abbett Short |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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