Correlation Between New Economy and Aggressive Investors
Can any of the company-specific risk be diversified away by investing in both New Economy and Aggressive Investors 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 Economy and Aggressive Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Aggressive Investors 1, you can compare the effects of market volatilities on New Economy and Aggressive Investors 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 Economy with a short position of Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Aggressive Investors.
Diversification Opportunities for New Economy and Aggressive Investors
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between New and Aggressive is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors and New Economy 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 Economy Fund are associated (or correlated) with Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of New Economy i.e., New Economy and Aggressive Investors go up and down completely randomly.
Pair Corralation between New Economy and Aggressive Investors
Assuming the 90 days horizon New Economy Fund is expected to generate 0.88 times more return on investment than Aggressive Investors. However, New Economy Fund is 1.13 times less risky than Aggressive Investors. It trades about -0.07 of its potential returns per unit of risk. Aggressive Investors 1 is currently generating about -0.07 per unit of risk. If you would invest 6,075 in New Economy Fund on December 28, 2024 and sell it today you would lose (370.00) from holding New Economy Fund or give up 6.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New Economy Fund vs. Aggressive Investors 1
Performance |
Timeline |
New Economy Fund |
Aggressive Investors |
New Economy and Aggressive Investors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Economy and Aggressive Investors
The main advantage of trading using opposite New Economy and Aggressive Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Aggressive Investors 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 Aggressive Investors will offset losses from the drop in Aggressive Investors' long position.New Economy vs. Us Government Securities | New Economy vs. Us Government Securities | New Economy vs. Fidelity Government Income | New Economy vs. Us Government Securities |
Aggressive Investors vs. Bridgeway Global Opportunities | Aggressive Investors vs. Ultra Small Pany Market | Aggressive Investors vs. Small Cap Value Fund | Aggressive Investors vs. Ultra Small Pany Fund |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |