Correlation Between New Economy and Future Scholar
Can any of the company-specific risk be diversified away by investing in both New Economy and Future Scholar 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 Economy and Future Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Future Scholar 529, you can compare the effects of market volatilities on New Economy and Future Scholar 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 Economy with a short position of Future Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Future Scholar.
Diversification Opportunities for New Economy and Future Scholar
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Future is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Future Scholar 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Scholar 529 and New Economy 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 Economy Fund are associated (or correlated) with Future Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Scholar 529 has no effect on the direction of New Economy i.e., New Economy and Future Scholar go up and down completely randomly.
Pair Corralation between New Economy and Future Scholar
Assuming the 90 days horizon New Economy Fund is expected to generate 6.08 times more return on investment than Future Scholar. However, New Economy is 6.08 times more volatile than Future Scholar 529. It trades about 0.18 of its potential returns per unit of risk. Future Scholar 529 is currently generating about 0.17 per unit of risk. If you would invest 6,489 in New Economy Fund on September 1, 2024 and sell it today you would earn a total of 215.00 from holding New Economy Fund or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Future Scholar 529
Performance |
| Timeline |
| New Economy Fund |
| Future Scholar 529 |
New Economy and Future Scholar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Future Scholar
The main advantage of trading using opposite New Economy and Future Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Future Scholar 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 Future Scholar will offset losses from the drop in Future Scholar's long position.| New Economy vs. Qs Small Capitalization | New Economy vs. Small Pany Growth | New Economy vs. Champlain Small | New Economy vs. The Hartford Small |
| Future Scholar vs. Vanguard Total Stock | Future Scholar vs. Vanguard 500 Index | Future Scholar vs. Vanguard Total Stock | Future Scholar vs. Vanguard Total Stock |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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