Correlation Between New World and Lsv Emerging
Can any of the company-specific risk be diversified away by investing in both New World and Lsv 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 Lsv 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 Lsv Emerging Markets, you can compare the effects of market volatilities on New World and Lsv 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 Lsv Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Lsv Emerging.
Diversification Opportunities for New World and Lsv Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Lsv is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Lsv Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv 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 Lsv Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Emerging Markets has no effect on the direction of New World i.e., New World and Lsv Emerging go up and down completely randomly.
Pair Corralation between New World and Lsv Emerging
Assuming the 90 days horizon New World is expected to generate 1.15 times less return on investment than Lsv Emerging. But when comparing it to its historical volatility, New World Fund is 1.16 times less risky than Lsv Emerging. It trades about 0.07 of its potential returns per unit of risk. Lsv Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,040 in Lsv Emerging Markets on September 4, 2024 and sell it today you would earn a total of 159.00 from holding Lsv Emerging Markets or generate 15.29% 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. Lsv Emerging Markets
Performance |
| Timeline |
| New World Fund |
| Lsv Emerging Markets |
New World and Lsv Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Lsv Emerging
The main advantage of trading using opposite New World and Lsv Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Lsv 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 Lsv Emerging will offset losses from the drop in Lsv 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 |
| Lsv Emerging vs. Scharf Global Opportunity | Lsv Emerging vs. Balanced Fund Investor | Lsv Emerging vs. Leggmason Partners Institutional | Lsv Emerging 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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