Correlation Between Short-intermediate and New World
Can any of the company-specific risk be diversified away by investing in both Short-intermediate and New World 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 Short-intermediate and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Intermediate Bond Fund and New World Fund, you can compare the effects of market volatilities on Short-intermediate and New World 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 Short-intermediate with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-intermediate and New World.
Diversification Opportunities for Short-intermediate and New World
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Short-intermediate and New is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Short Intermediate Bond Fund and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and Short-intermediate 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 Short Intermediate Bond Fund are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Short-intermediate i.e., Short-intermediate and New World go up and down completely randomly.
Pair Corralation between Short-intermediate and New World
Assuming the 90 days horizon Short-intermediate is expected to generate 2.26 times less return on investment than New World. But when comparing it to its historical volatility, Short Intermediate Bond Fund is 4.71 times less risky than New World. It trades about 0.13 of its potential returns per unit of risk. New World Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,567 in New World Fund on August 26, 2024 and sell it today you would earn a total of 1,502 from holding New World Fund or generate 22.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Intermediate Bond Fund vs. New World Fund
Performance |
| Timeline |
| Short Intermediate Bond |
| New World Fund |
Short-intermediate and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-intermediate and New World
The main advantage of trading using opposite Short-intermediate and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-intermediate position performs unexpectedly, New World 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 World will offset losses from the drop in New World's long position.| Short-intermediate vs. Mfs Technology Fund | Short-intermediate vs. Blackrock Science Technology | Short-intermediate vs. Allianzgi Technology Fund | Short-intermediate vs. Firsthand Technology Opportunities |
| New World vs. California Bond Fund | New World vs. Chartwell Short Duration | New World vs. Rbc Bluebay Global | New World vs. Bbh Intermediate Municipal |
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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