Correlation Between New Alternatives and Pax Esg
Can any of the company-specific risk be diversified away by investing in both New Alternatives and Pax Esg 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 Pax Esg 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 Pax Esg Beta, you can compare the effects of market volatilities on New Alternatives and Pax Esg 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 Pax Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Alternatives and Pax Esg.
Diversification Opportunities for New Alternatives and Pax Esg
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Pax is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding New Alternatives Fund and Pax Esg Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Esg Beta 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 Pax Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Esg Beta has no effect on the direction of New Alternatives i.e., New Alternatives and Pax Esg go up and down completely randomly.
Pair Corralation between New Alternatives and Pax Esg
Assuming the 90 days horizon New Alternatives Fund is expected to under-perform the Pax Esg. In addition to that, New Alternatives is 1.24 times more volatile than Pax Esg Beta. It trades about -0.01 of its total potential returns per unit of risk. Pax Esg Beta is currently generating about 0.12 per unit of volatility. If you would invest 2,465 in Pax Esg Beta on August 29, 2024 and sell it today you would earn a total of 317.00 from holding Pax Esg Beta or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Alternatives Fund vs. Pax Esg Beta
Performance |
| Timeline |
| New Alternatives |
| Pax Esg Beta |
New Alternatives and Pax Esg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Alternatives and Pax Esg
The main advantage of trading using opposite New Alternatives and Pax Esg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Alternatives position performs unexpectedly, Pax Esg 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 Pax Esg will offset losses from the drop in Pax Esg'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 |
| Pax Esg vs. Pax Balanced Fund | Pax Esg vs. Pax High Yield | Pax Esg vs. Green Century Equity | Pax Esg vs. Domini Impact Equity |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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