Correlation Between New World and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both New World and Amcap Fund 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 Amcap Fund 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 Amcap Fund Class, you can compare the effects of market volatilities on New World and Amcap Fund 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 Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Amcap Fund.
Diversification Opportunities for New World and Amcap Fund
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Amcap is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class 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 Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of New World i.e., New World and Amcap Fund go up and down completely randomly.
Pair Corralation between New World and Amcap Fund
Assuming the 90 days horizon New World Fund is expected to under-perform the Amcap Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.38 times less risky than Amcap Fund. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Amcap Fund Class is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,449 in Amcap Fund Class on September 2, 2024 and sell it today you would earn a total of 206.00 from holding Amcap Fund Class or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Amcap Fund Class
Performance |
| Timeline |
| New World Fund |
| Amcap Fund Class |
New World and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Amcap Fund
The main advantage of trading using opposite New World and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| New World vs. Qs Large Cap | New World vs. Legg Mason Bw | New World vs. Fidelity Series 1000 | New World vs. Qs Large Cap |
| Amcap Fund vs. Income Fund Of | Amcap Fund vs. American Funds 2015 | Amcap Fund vs. New World Fund | Amcap Fund vs. American Mutual 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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