Correlation Between New World and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both New World and Cohen Steers 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 Cohen Steers 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 Cohen Steers Real, you can compare the effects of market volatilities on New World and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Cohen Steers.
Diversification Opportunities for New World and Cohen Steers
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Cohen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Cohen Steers Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Real 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Real has no effect on the direction of New World i.e., New World and Cohen Steers go up and down completely randomly.
Pair Corralation between New World and Cohen Steers
Assuming the 90 days horizon New World is expected to generate 1.08 times less return on investment than Cohen Steers. But when comparing it to its historical volatility, New World Fund is 1.54 times less risky than Cohen Steers. It trades about 0.06 of its potential returns per unit of risk. Cohen Steers Real is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,515 in Cohen Steers Real on August 26, 2024 and sell it today you would earn a total of 346.00 from holding Cohen Steers Real or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Cohen Steers Real
Performance |
| Timeline |
| New World Fund |
| Cohen Steers Real |
New World and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Cohen Steers
The main advantage of trading using opposite New World and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| New World vs. Aqr Long Short Equity | New World vs. Astor Longshort Fund | New World vs. Guggenheim Long Short | New World vs. Short Intermediate Bond Fund |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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