Correlation Between New Perspective and Locorr Long/short
Can any of the company-specific risk be diversified away by investing in both New Perspective and Locorr Long/short 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 Locorr Long/short 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 Locorr Longshort Modities, you can compare the effects of market volatilities on New Perspective and Locorr Long/short 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 Locorr Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Locorr Long/short.
Diversification Opportunities for New Perspective and Locorr Long/short
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Locorr is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Locorr Longshort Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Longshort Modities 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 Locorr Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Longshort Modities has no effect on the direction of New Perspective i.e., New Perspective and Locorr Long/short go up and down completely randomly.
Pair Corralation between New Perspective and Locorr Long/short
Assuming the 90 days horizon New Perspective Fund is expected to generate 2.59 times more return on investment than Locorr Long/short. However, New Perspective is 2.59 times more volatile than Locorr Longshort Modities. It trades about 0.09 of its potential returns per unit of risk. Locorr Longshort Modities is currently generating about -0.05 per unit of risk. If you would invest 5,086 in New Perspective Fund on August 31, 2024 and sell it today you would earn a total of 1,552 from holding New Perspective Fund or generate 30.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Locorr Longshort Modities
Performance |
| Timeline |
| New Perspective |
| Locorr Longshort Modities |
New Perspective and Locorr Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Locorr Long/short
The main advantage of trading using opposite New Perspective and Locorr Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Locorr Long/short 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 Locorr Long/short will offset losses from the drop in Locorr Long/short's long position.| New Perspective vs. Technology Ultrasector Profund | New Perspective vs. Technology Ultrasector Profund | New Perspective vs. Hennessy Technology Fund | New Perspective vs. Global Technology Portfolio |
| Locorr Long/short vs. Aqr Managed Futures | Locorr Long/short vs. Pimco Trends Managed | Locorr Long/short vs. Pimco Trends Managed | Locorr Long/short vs. American Beacon Ahl |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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