Correlation Between NYSE Composite and New Perspective
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and New Perspective 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 NYSE Composite and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and New Perspective Fund, you can compare the effects of market volatilities on NYSE Composite and New Perspective 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 NYSE Composite with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and New Perspective.
Diversification Opportunities for NYSE Composite and New Perspective
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and New is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and NYSE Composite 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 NYSE Composite are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of NYSE Composite i.e., NYSE Composite and New Perspective go up and down completely randomly.
Pair Corralation between NYSE Composite and New Perspective
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.82 times more return on investment than New Perspective. However, NYSE Composite is 1.21 times less risky than New Perspective. It trades about 0.11 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.08 per unit of risk. If you would invest 1,766,949 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 260,255 from holding NYSE Composite or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. New Perspective Fund
Performance |
| Timeline |
NYSE Composite and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
New Perspective Fund
Pair trading matchups for New Perspective
Pair Trading with NYSE Composite and New Perspective
The main advantage of trading using opposite NYSE Composite and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| New Perspective vs. Growth Fund Of | New Perspective vs. American Funds Fundamental | New Perspective vs. Investment Of America | New Perspective vs. Smallcap World Fund |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |