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
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Aggressive is 0.73. 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 is expected to generate 6.09 times less return on investment than Aggressive Investors. In addition to that, New Economy is 1.13 times more volatile than Aggressive Investors 1. It trades about 0.01 of its total potential returns per unit of risk. Aggressive Investors 1 is currently generating about 0.06 per unit of volatility. If you would invest 8,400 in Aggressive Investors 1 on December 5, 2024 and sell it today you would earn a total of 1,166 from holding Aggressive Investors 1 or generate 13.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
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. Transamerica Cleartrack Retirement | New Economy vs. Fidelity Managed Retirement | New Economy vs. College Retirement Equities | New Economy vs. Vanguard Target Retirement |
Aggressive Investors vs. Versatile Bond Portfolio | Aggressive Investors vs. Doubleline Total Return | Aggressive Investors vs. Flexible Bond Portfolio | Aggressive Investors vs. Ab Bond Inflation |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |