Correlation Between New Alternatives and Green Century
Can any of the company-specific risk be diversified away by investing in both New Alternatives and Green Century 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 Alternatives and Green Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Alternatives Fund and Green Century Equity, you can compare the effects of market volatilities on New Alternatives and Green Century 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 Alternatives with a short position of Green Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Alternatives and Green Century.
Diversification Opportunities for New Alternatives and Green Century
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Green is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding New Alternatives Fund and Green Century Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Century Equity and New Alternatives 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 Alternatives Fund are associated (or correlated) with Green Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Century Equity has no effect on the direction of New Alternatives i.e., New Alternatives and Green Century go up and down completely randomly.
Pair Corralation between New Alternatives and Green Century
Assuming the 90 days horizon New Alternatives Fund is expected to under-perform the Green Century. In addition to that, New Alternatives is 1.08 times more volatile than Green Century Equity. It trades about -0.01 of its total potential returns per unit of risk. Green Century Equity is currently generating about 0.11 per unit of volatility. If you would invest 8,289 in Green Century Equity on September 1, 2024 and sell it today you would earn a total of 1,083 from holding Green Century Equity or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
New Alternatives Fund vs. Green Century Equity
Performance |
| Timeline |
| New Alternatives |
| Green Century Equity |
New Alternatives and Green Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Alternatives and Green Century
The main advantage of trading using opposite New Alternatives and Green Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Alternatives position performs unexpectedly, Green Century 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 Green Century will offset losses from the drop in Green Century's long position.| New Alternatives vs. Guinness Atkinson Alternative | New Alternatives vs. Calvert Global Energy | New Alternatives vs. Portfolio 21 Global | New Alternatives vs. Green Century Balanced |
| Green Century vs. Green Century Balanced | Green Century vs. Portfolio 21 Global | Green Century vs. New Alternatives Fund | Green Century vs. Pax Esg Beta |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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