Correlation Between New Germany and Flow Capital
Can any of the company-specific risk be diversified away by investing in both New Germany and Flow Capital 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 Germany and Flow Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Germany Closed and Flow Capital Corp, you can compare the effects of market volatilities on New Germany and Flow Capital 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 Germany with a short position of Flow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Germany and Flow Capital.
Diversification Opportunities for New Germany and Flow Capital
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and Flow is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding New Germany Closed and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and New Germany 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 Germany Closed are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of New Germany i.e., New Germany and Flow Capital go up and down completely randomly.
Pair Corralation between New Germany and Flow Capital
Allowing for the 90-day total investment horizon New Germany Closed is expected to under-perform the Flow Capital. But the fund apears to be less risky and, when comparing its historical volatility, New Germany Closed is 3.94 times less risky than Flow Capital. The fund trades about -0.01 of its potential returns per unit of risk. The Flow Capital Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Flow Capital Corp on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Flow Capital Corp or generate 41.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 46.24% |
| Values | Daily Returns |
New Germany Closed vs. Flow Capital Corp
Performance |
| Timeline |
| New Germany Closed |
| Flow Capital Corp |
New Germany and Flow Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Germany and Flow Capital
The main advantage of trading using opposite New Germany and Flow Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Germany position performs unexpectedly, Flow Capital 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 Flow Capital will offset losses from the drop in Flow Capital's long position.| New Germany vs. Eagle Point Income | New Germany vs. Western Asset High | New Germany vs. Nuveen New York | New Germany vs. Western Asset High |
| Flow Capital vs. HUMANA INC | Flow Capital vs. SCOR PK | Flow Capital vs. Aquagold International | Flow Capital vs. Thrivent High Yield |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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