Correlation Between New World and Johcm Emerging
Can any of the company-specific risk be diversified away by investing in both New World and Johcm Emerging 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 World and Johcm Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Johcm Emerging Markets, you can compare the effects of market volatilities on New World and Johcm Emerging 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 World with a short position of Johcm Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Johcm Emerging.
Diversification Opportunities for New World and Johcm Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Johcm is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Johcm Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johcm Emerging Markets and New World 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 World Fund are associated (or correlated) with Johcm Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johcm Emerging Markets has no effect on the direction of New World i.e., New World and Johcm Emerging go up and down completely randomly.
Pair Corralation between New World and Johcm Emerging
Assuming the 90 days horizon New World Fund is expected to under-perform the Johcm Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.02 times less risky than Johcm Emerging. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Johcm Emerging Markets is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,472 in Johcm Emerging Markets on August 29, 2024 and sell it today you would lose (31.00) from holding Johcm Emerging Markets or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Johcm Emerging Markets
Performance |
| Timeline |
| New World Fund |
| Johcm Emerging Markets |
New World and Johcm Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Johcm Emerging
The main advantage of trading using opposite New World and Johcm Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Johcm Emerging 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 Johcm Emerging will offset losses from the drop in Johcm Emerging's long position.| New World vs. Vanguard Emerging Markets | New World vs. Vanguard Emerging Markets | New World vs. HUMANA INC | New World vs. Aquagold International |
| Johcm Emerging vs. Ab Global Bond | Johcm Emerging vs. Us Global Leaders | Johcm Emerging vs. Wasatch Global Opportunities | Johcm Emerging vs. Massmutual Premier Global |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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