Correlation Between New World and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both New World and Ep 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 Ep 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 Ep Emerging Markets, you can compare the effects of market volatilities on New World and Ep 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 Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Ep Emerging.
Diversification Opportunities for New World and Ep Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and EPASX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep 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 Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of New World i.e., New World and Ep Emerging go up and down completely randomly.
Pair Corralation between New World and Ep Emerging
Assuming the 90 days horizon New World Fund is expected to generate 1.33 times more return on investment than Ep Emerging. However, New World is 1.33 times more volatile than Ep Emerging Markets. It trades about 0.21 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.19 per unit of risk. If you would invest 7,691 in New World Fund on November 9, 2024 and sell it today you would earn a total of 257.00 from holding New World Fund or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Ep Emerging Markets
Performance |
| Timeline |
| New World Fund |
| Ep Emerging Markets |
New World and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Ep Emerging
The main advantage of trading using opposite New World and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Ep 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| New World vs. Smallcap World Fund | New World vs. Investment Of America | New World vs. Europacific Growth Fund | New World vs. Capital World Growth |
| Ep Emerging vs. Blrc Sgy Mnp | Ep Emerging vs. Rbb Fund | Ep Emerging vs. Midas Fund Midas | Ep Emerging vs. Intermediate Term Tax Free Bond |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |