Correlation Between Europacific Growth and New Perspective
Can any of the company-specific risk be diversified away by investing in both Europacific Growth 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 Europacific Growth and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and New Perspective Fund, you can compare the effects of market volatilities on Europacific Growth 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 Europacific Growth with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and New Perspective.
Diversification Opportunities for Europacific Growth and New Perspective
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Europacific and New is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Europacific Growth 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 Europacific Growth Fund 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 Europacific Growth i.e., Europacific Growth and New Perspective go up and down completely randomly.
Pair Corralation between Europacific Growth and New Perspective
Assuming the 90 days horizon Europacific Growth Fund is expected to under-perform the New Perspective. In addition to that, Europacific Growth is 1.07 times more volatile than New Perspective Fund. It trades about -0.03 of its total potential returns per unit of risk. New Perspective Fund is currently generating about 0.23 per unit of volatility. If you would invest 6,307 in New Perspective Fund on September 1, 2024 and sell it today you would earn a total of 199.00 from holding New Perspective Fund or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. New Perspective Fund
Performance |
| Timeline |
| Europacific Growth |
| New Perspective |
Europacific Growth and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and New Perspective
The main advantage of trading using opposite Europacific Growth and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth 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.| Europacific Growth vs. Vanguard Institutional Index | Europacific Growth vs. Vanguard Mid Cap Index | Europacific Growth vs. Washington Mutual Investors | Europacific Growth vs. Vanguard Small Cap Index |
| New Perspective vs. Mirova Global Green | New Perspective vs. Barings Global Floating | New Perspective vs. Ab Global Risk | New Perspective vs. Wisdomtree Siegel Global |
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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