Correlation Between New America and CBH
Can any of the company-specific risk be diversified away by investing in both New America and CBH 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 America and CBH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New America High and CBH, you can compare the effects of market volatilities on New America and CBH 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 America with a short position of CBH. Check out your portfolio center. Please also check ongoing floating volatility patterns of New America and CBH.
Diversification Opportunities for New America and CBH
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and CBH is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding New America High and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and New America 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 America High are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of New America i.e., New America and CBH go up and down completely randomly.
Pair Corralation between New America and CBH
Considering the 90-day investment horizon New America High is expected to generate 1.31 times more return on investment than CBH. However, New America is 1.31 times more volatile than CBH. It trades about 0.09 of its potential returns per unit of risk. CBH is currently generating about 0.07 per unit of risk. If you would invest 605.00 in New America High on September 3, 2024 and sell it today you would earn a total of 225.00 from holding New America High or generate 37.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.27% |
| Values | Daily Returns |
New America High vs. CBH
Performance |
| Timeline |
| New America High |
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New America and CBH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New America and CBH
The main advantage of trading using opposite New America and CBH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New America position performs unexpectedly, CBH 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 CBH will offset losses from the drop in CBH's long position.| New America vs. Pioneer Municipal High | New America vs. DWS Municipal Income | New America vs. RiverNorth Specialty Finance | New America vs. Putnam Managed Municipal |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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