Correlation Between New Economy and Holbrook Income
Can any of the company-specific risk be diversified away by investing in both New Economy and Holbrook Income 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 Holbrook Income 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 Holbrook Income, you can compare the effects of market volatilities on New Economy and Holbrook Income 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 Holbrook Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Holbrook Income.
Diversification Opportunities for New Economy and Holbrook Income
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Holbrook is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Holbrook Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holbrook Income 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 Holbrook Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holbrook Income has no effect on the direction of New Economy i.e., New Economy and Holbrook Income go up and down completely randomly.
Pair Corralation between New Economy and Holbrook Income
Assuming the 90 days horizon New Economy Fund is expected to generate 4.3 times more return on investment than Holbrook Income. However, New Economy is 4.3 times more volatile than Holbrook Income. It trades about 0.09 of its potential returns per unit of risk. Holbrook Income is currently generating about 0.1 per unit of risk. If you would invest 6,049 in New Economy Fund on September 3, 2024 and sell it today you would earn a total of 687.00 from holding New Economy Fund or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Holbrook Income
Performance |
| Timeline |
| New Economy Fund |
| Holbrook Income |
New Economy and Holbrook Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Holbrook Income
The main advantage of trading using opposite New Economy and Holbrook Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Holbrook Income 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 Holbrook Income will offset losses from the drop in Holbrook Income's long position.| New Economy vs. Artisan Small Cap | New Economy vs. Tax Managed Mid Small | New Economy vs. Fisher Small Cap | New Economy vs. Rbb Fund |
| Holbrook Income vs. Leggmason Partners Institutional | Holbrook Income vs. Iaadx | Holbrook Income vs. Bbh Intermediate Municipal | Holbrook Income vs. Arrow Managed Futures |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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