Correlation Between New Alternatives and Green Century

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

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

Diversification Opportunities for New Alternatives and Green Century

-0.51

Correlation Coefficient

New Alternatives  Green Century

Excellent diversification

The 3 months correlation between New and GREEN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Alternatives Fund and Green Century Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Century Balanced and New Alternatives 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 Alternatives Fund are associated (or correlated) with Green Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Century Balanced has no effect on the direction of New Alternatives i.e., New Alternatives and Green Century go up and down completely randomly.

Pair Corralation between New Alternatives and Green Century

Assuming the 90 days horizon New Alternatives Fund is expected to generate 0.93 times more return on investment than Green Century. However, New Alternatives Fund is 1.07 times less risky than Green Century. It trades about 0.1 of its potential returns per unit of risk. Green Century Balanced is currently generating about -0.14 per unit of risk. If you would invest  6,096  in New Alternatives Fund on December 27, 2024 and sell it today you would earn a total of  369.00  from holding New Alternatives Fund or generate 6.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

New Alternatives Fund  vs.  Green Century Balanced

New Alternatives

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Alternatives Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, New Alternatives may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Green Century Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Century Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with New Alternatives and Green Century

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

The idea behind New Alternatives Fund and Green Century Balanced 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.