Correlation Between New Zealand and Economic Investment
Can any of the company-specific risk be diversified away by investing in both New Zealand and Economic Investment 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 Zealand and Economic Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Zealand Energy and Economic Investment Trust, you can compare the effects of market volatilities on New Zealand and Economic Investment 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 Zealand with a short position of Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Zealand and Economic Investment.
Diversification Opportunities for New Zealand and Economic Investment
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Economic is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding New Zealand Energy and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust and New Zealand 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 Zealand Energy are associated (or correlated) with Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of New Zealand i.e., New Zealand and Economic Investment go up and down completely randomly.
Pair Corralation between New Zealand and Economic Investment
Given the investment horizon of 90 days New Zealand Energy is expected to generate 31.27 times more return on investment than Economic Investment. However, New Zealand is 31.27 times more volatile than Economic Investment Trust. It trades about 0.32 of its potential returns per unit of risk. Economic Investment Trust is currently generating about 0.19 per unit of risk. If you would invest 47.00 in New Zealand Energy on September 5, 2024 and sell it today you would earn a total of 73.00 from holding New Zealand Energy or generate 155.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Zealand Energy vs. Economic Investment Trust
Performance |
| Timeline |
| New Zealand Energy |
| Economic Investment Trust |
New Zealand and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Zealand and Economic Investment
The main advantage of trading using opposite New Zealand and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Zealand position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.| New Zealand vs. Economic Investment Trust | New Zealand vs. Diversified Royalty Corp | New Zealand vs. Western Investment | New Zealand vs. Constellation Software |
| Economic Investment vs. Enbridge Pref 5 | Economic Investment vs. Enbridge Pref 11 | Economic Investment vs. Enbridge Pref L | Economic Investment vs. E Split Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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