Correlation Between Economic Investment and New Zealand
Can any of the company-specific risk be diversified away by investing in both Economic Investment and New Zealand 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 Economic Investment and New Zealand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and New Zealand Energy, you can compare the effects of market volatilities on Economic Investment and New Zealand 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 Economic Investment with a short position of New Zealand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and New Zealand.
Diversification Opportunities for Economic Investment and New Zealand
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Economic and New is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and New Zealand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Energy and Economic Investment 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 Economic Investment Trust are associated (or correlated) with New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Energy has no effect on the direction of Economic Investment i.e., Economic Investment and New Zealand go up and down completely randomly.
Pair Corralation between Economic Investment and New Zealand
Assuming the 90 days trading horizon Economic Investment is expected to generate 43.07 times less return on investment than New Zealand. But when comparing it to its historical volatility, Economic Investment Trust is 31.0 times less risky than New Zealand. It trades about 0.2 of its potential returns per unit of risk. New Zealand Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 51.00 in New Zealand Energy on September 7, 2024 and sell it today you would earn a total of 60.00 from holding New Zealand Energy or generate 117.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Economic Investment Trust vs. New Zealand Energy
Performance |
| Timeline |
| Economic Investment Trust |
| New Zealand Energy |
Economic Investment and New Zealand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and New Zealand
The main advantage of trading using opposite Economic Investment and New Zealand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment position performs unexpectedly, New Zealand 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 Zealand will offset losses from the drop in New Zealand's long position.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| New Zealand vs. Fairfax Financial Holdings | New Zealand vs. Financial 15 Split | New Zealand vs. Royal Bank of | New Zealand vs. MAG Silver Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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