Correlation Between New World and Seafarer Overseas
Can any of the company-specific risk be diversified away by investing in both New World and Seafarer Overseas 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 Seafarer Overseas 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 Seafarer Overseas Value, you can compare the effects of market volatilities on New World and Seafarer Overseas 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 Seafarer Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Seafarer Overseas.
Diversification Opportunities for New World and Seafarer Overseas
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Seafarer is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Seafarer Overseas Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Overseas Value 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 Seafarer Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Overseas Value has no effect on the direction of New World i.e., New World and Seafarer Overseas go up and down completely randomly.
Pair Corralation between New World and Seafarer Overseas
Assuming the 90 days horizon New World Fund is expected to generate 1.01 times more return on investment than Seafarer Overseas. However, New World is 1.01 times more volatile than Seafarer Overseas Value. It trades about 0.02 of its potential returns per unit of risk. Seafarer Overseas Value is currently generating about -0.02 per unit of risk. If you would invest 8,038 in New World Fund on September 2, 2024 and sell it today you would earn a total of 63.00 from holding New World Fund or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Seafarer Overseas Value
Performance |
| Timeline |
| New World Fund |
| Seafarer Overseas Value |
New World and Seafarer Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Seafarer Overseas
The main advantage of trading using opposite New World and Seafarer Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Seafarer Overseas 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 Seafarer Overseas will offset losses from the drop in Seafarer Overseas' long position.| New World vs. Smallcap World Fund | New World vs. Capital World Growth | New World vs. American Funds Fundamental | New World vs. Capital Income Builder |
| Seafarer Overseas vs. Seafarer Overseas Growth | Seafarer Overseas vs. Seafarer Overseas Growth | Seafarer Overseas vs. Vanguard International Growth | Seafarer Overseas vs. Voya Midcap Opportunities |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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