Correlation Between Industrials Portfolio and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Industrials Portfolio and New Alternatives 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 Industrials Portfolio and New Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrials Portfolio Industrials and New Alternatives Fund, you can compare the effects of market volatilities on Industrials Portfolio and New Alternatives 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 Industrials Portfolio with a short position of New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrials Portfolio and New Alternatives.
Diversification Opportunities for Industrials Portfolio and New Alternatives
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrials and New is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Industrials Portfolio Industri and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives and Industrials Portfolio 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 Industrials Portfolio Industrials are associated (or correlated) with New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Industrials Portfolio i.e., Industrials Portfolio and New Alternatives go up and down completely randomly.
Pair Corralation between Industrials Portfolio and New Alternatives
Assuming the 90 days horizon Industrials Portfolio Industrials is expected to generate 1.03 times more return on investment than New Alternatives. However, Industrials Portfolio is 1.03 times more volatile than New Alternatives Fund. It trades about 0.08 of its potential returns per unit of risk. New Alternatives Fund is currently generating about -0.01 per unit of risk. If you would invest 3,000 in Industrials Portfolio Industrials on August 26, 2024 and sell it today you would earn a total of 1,536 from holding Industrials Portfolio Industrials or generate 51.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrials Portfolio Industri vs. New Alternatives Fund
Performance |
| Timeline |
| Industrials Portfolio |
| New Alternatives |
Industrials Portfolio and New Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrials Portfolio and New Alternatives
The main advantage of trading using opposite Industrials Portfolio and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrials Portfolio position performs unexpectedly, New Alternatives 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 Alternatives will offset losses from the drop in New Alternatives' long position.The idea behind Industrials Portfolio Industrials and New Alternatives Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| New Alternatives vs. New Alternatives Fund | New Alternatives vs. Alternative Credit Income | New Alternatives vs. Vaughan Nelson Select | New Alternatives vs. Industrials Portfolio Industrials |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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