Correlation Between New Perspective and Capital World
Can any of the company-specific risk be diversified away by investing in both New Perspective and Capital World 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 Perspective and Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Capital World Growth, you can compare the effects of market volatilities on New Perspective and Capital World 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 Perspective with a short position of Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Capital World.
Diversification Opportunities for New Perspective and Capital World
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between New and Capital is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth and New Perspective 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 Perspective Fund are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of New Perspective i.e., New Perspective and Capital World go up and down completely randomly.
Pair Corralation between New Perspective and Capital World
Assuming the 90 days horizon New Perspective Fund is expected to generate 1.09 times more return on investment than Capital World. However, New Perspective is 1.09 times more volatile than Capital World Growth. It trades about 0.03 of its potential returns per unit of risk. Capital World Growth is currently generating about 0.0 per unit of risk. If you would invest 6,016 in New Perspective Fund on August 28, 2024 and sell it today you would earn a total of 22.00 from holding New Perspective Fund or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Capital World Growth
Performance |
| Timeline |
| New Perspective |
| Capital World Growth |
New Perspective and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Capital World
The main advantage of trading using opposite New Perspective and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| New Perspective vs. Wells Fargo Advantage | New Perspective vs. Fidelity Advisor Gold | New Perspective vs. James Balanced Golden | New Perspective vs. Invesco Gold Special |
| Capital World vs. Ab Municipal Bond | Capital World vs. Ab Bond Inflation | Capital World vs. Lord Abbett Inflation | Capital World vs. Vy Blackrock Inflation |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |