Correlation Between William Blair and New World

Can any of the company-specific risk be diversified away by investing in both William Blair and New 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 William Blair and New World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between William Blair Large and New World Fund, you can compare the effects of market volatilities on William Blair and New 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 William Blair with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and New World.

Diversification Opportunities for William Blair and New World

-0.28

Correlation Coefficient

William Blair  New World

Very good diversification

The 3 months correlation between William and New is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Large and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and William Blair 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 William Blair Large are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of William Blair i.e., William Blair and New World go up and down completely randomly.

Pair Corralation between William Blair and New World

Assuming the 90 days horizon William Blair Large is expected to generate 1.39 times more return on investment than New World. However, William Blair is 1.39 times more volatile than New World Fund. It trades about 0.18 of its potential returns per unit of risk. New World Fund is currently generating about 0.08 per unit of risk. If you would invest  2,906  in William Blair Large on September 11, 2024 and sell it today you would earn a total of  328.00  from holding William Blair Large or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

William Blair Large  vs.  New World Fund

William Blair Large

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Large are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

New World Fund

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New World Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, New World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with William Blair and New World

The main advantage of trading using opposite William Blair and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair position performs unexpectedly, New 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 New World will offset losses from the drop in New World's long position.

The idea behind William Blair Large and New World Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.