Correlation Between Mutual Of and New Economy
Can any of the company-specific risk be diversified away by investing in both Mutual Of 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 Mutual Of and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and New Economy Fund, you can compare the effects of market volatilities on Mutual Of 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 Mutual Of with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and New Economy.
Diversification Opportunities for Mutual Of and New Economy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mutual and New is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America 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 Mutual Of 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 Mutual Of America 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 Mutual Of i.e., Mutual Of and New Economy go up and down completely randomly.
Pair Corralation between Mutual Of and New Economy
Assuming the 90 days horizon Mutual Of America is expected to generate 0.9 times more return on investment than New Economy. However, Mutual Of America is 1.11 times less risky than New Economy. It trades about 0.0 of its potential returns per unit of risk. New Economy Fund is currently generating about -0.06 per unit of risk. If you would invest 1,490 in Mutual Of America on October 23, 2024 and sell it today you would lose (12.00) from holding Mutual Of America or give up 0.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mutual Of America vs. New Economy Fund
Performance |
Timeline |
Mutual Of America |
New Economy Fund |
Mutual Of and New Economy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mutual Of and New Economy
The main advantage of trading using opposite Mutual Of and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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.The idea behind Mutual Of America and New Economy 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.New Economy vs. Forum Real Estate | New Economy vs. Commonwealth Real Estate | New Economy vs. Real Estate Ultrasector | New Economy vs. Amg Managers Centersquare |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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