Correlation Between New World and Aquagold International

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

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

Diversification Opportunities for New World and Aquagold International

0.0

Correlation Coefficient

New World  Aquagold International

Pay attention - limited upside

The 3 months correlation between New and Aquagold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and New World 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 World Fund are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of New World i.e., New World and Aquagold International go up and down completely randomly.

Pair Corralation between New World and Aquagold International

Assuming the 90 days horizon New World is expected to generate 65.55 times less return on investment than Aquagold International. But when comparing it to its historical volatility, New World Fund is 69.89 times less risky than Aquagold International. It trades about 0.06 of its potential returns per unit of risk. Aquagold International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Aquagold International on September 19, 2024 and sell it today you would lose (16.40) from holding Aquagold International or give up 96.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

New World Fund  vs.  Aquagold International

New World Fund

Risk-Adjusted Performance

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Very Weak

Over the last 90 days New World Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, New World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with New World and Aquagold International

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

The idea behind New World Fund and Aquagold International 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.