Correlation Between New World and International Fund
Can any of the company-specific risk be diversified away by investing in both New World and International Fund 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 International Fund 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 International Fund International, you can compare the effects of market volatilities on New World and International Fund 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 International Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and International Fund.
Diversification Opportunities for New World and International Fund
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and International Fund Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Fund 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 International Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Fund has no effect on the direction of New World i.e., New World and International Fund go up and down completely randomly.
Pair Corralation between New World and International Fund
Assuming the 90 days horizon New World Fund is expected to under-perform the International Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.07 times less risky than International Fund. The mutual fund trades about -0.09 of its potential returns per unit of risk. The International Fund International is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,597 in International Fund International on September 1, 2024 and sell it today you would earn a total of 126.00 from holding International Fund International or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. International Fund Internation
Performance |
| Timeline |
| New World Fund |
| International Fund |
New World and International Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and International Fund
The main advantage of trading using opposite New World and International Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, International Fund 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 International Fund will offset losses from the drop in International Fund's long position.| New World vs. International Investors Gold | New World vs. James Balanced Golden | New World vs. Short Precious Metals | New World vs. Gold And Precious |
| International Fund vs. Pimco Moditiesplus Strategy | International Fund vs. The Brown Capital | International Fund vs. Goldman Sachs International | International Fund vs. Cohen Steers Real |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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