Correlation Between New Perspective and Investec Global
Can any of the company-specific risk be diversified away by investing in both New Perspective and Investec Global 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 Perspective and Investec Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Investec Global Franchise, you can compare the effects of market volatilities on New Perspective and Investec Global 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 Perspective with a short position of Investec Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Investec Global.
Diversification Opportunities for New Perspective and Investec Global
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Investec is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Investec Global Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Global Franchise and New Perspective 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 Perspective Fund are associated (or correlated) with Investec Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Global Franchise has no effect on the direction of New Perspective i.e., New Perspective and Investec Global go up and down completely randomly.
Pair Corralation between New Perspective and Investec Global
Assuming the 90 days horizon New Perspective Fund is expected to generate 1.14 times more return on investment than Investec Global. However, New Perspective is 1.14 times more volatile than Investec Global Franchise. It trades about 0.06 of its potential returns per unit of risk. Investec Global Franchise is currently generating about 0.06 per unit of risk. If you would invest 4,760 in New Perspective Fund on August 31, 2024 and sell it today you would earn a total of 1,357 from holding New Perspective Fund or generate 28.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Investec Global Franchise
Performance |
| Timeline |
| New Perspective |
| Investec Global Franchise |
New Perspective and Investec Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Investec Global
The main advantage of trading using opposite New Perspective and Investec Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Investec Global 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 Investec Global will offset losses from the drop in Investec Global's long position.| New Perspective vs. American Funds New | New Perspective vs. New Perspective Fund | New Perspective vs. New Perspective Fund | New Perspective vs. New Perspective Fund |
| Investec Global vs. Volumetric Fund Volumetric | Investec Global vs. Rbb Fund | Investec Global vs. Ab Value Fund | Investec Global vs. Falcon Focus Scv |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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