Correlation Between Aggressive Investors and New Economy
Can any of the company-specific risk be diversified away by investing in both Aggressive Investors and New Economy 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 Aggressive Investors and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Investors 1 and New Economy Fund, you can compare the effects of market volatilities on Aggressive Investors and New Economy 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 Aggressive Investors with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Investors and New Economy.
Diversification Opportunities for Aggressive Investors and New Economy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aggressive and New is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Investors 1 and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and Aggressive Investors 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 Aggressive Investors 1 are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Aggressive Investors i.e., Aggressive Investors and New Economy go up and down completely randomly.
Pair Corralation between Aggressive Investors and New Economy
Assuming the 90 days horizon Aggressive Investors 1 is expected to generate 1.09 times more return on investment than New Economy. However, Aggressive Investors is 1.09 times more volatile than New Economy Fund. It trades about 0.2 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.19 per unit of risk. If you would invest 8,905 in Aggressive Investors 1 on September 18, 2024 and sell it today you would earn a total of 1,067 from holding Aggressive Investors 1 or generate 11.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aggressive Investors 1 vs. New Economy Fund
Performance |
Timeline |
Aggressive Investors |
New Economy Fund |
Aggressive Investors and New Economy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aggressive Investors and New Economy
The main advantage of trading using opposite Aggressive Investors and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Investors position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.Aggressive Investors vs. Managed Volatility Fund | Aggressive Investors vs. Ultra Small Pany Market | Aggressive Investors vs. Small Cap Value Fund | Aggressive Investors vs. Omni Small Cap Value |
New Economy vs. Commonwealth Global Fund | New Economy vs. Issachar Fund Class | New Economy vs. Multimedia Portfolio Multimedia | New Economy vs. Century Small Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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