Correlation Between New Economy and Counterpoint Tactical
Can any of the company-specific risk be diversified away by investing in both New Economy and Counterpoint Tactical 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 Counterpoint Tactical 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 Counterpoint Tactical Equity, you can compare the effects of market volatilities on New Economy and Counterpoint Tactical 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 Counterpoint Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Counterpoint Tactical.
Diversification Opportunities for New Economy and Counterpoint Tactical
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Counterpoint is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Counterpoint Tactical Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical 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 Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of New Economy i.e., New Economy and Counterpoint Tactical go up and down completely randomly.
Pair Corralation between New Economy and Counterpoint Tactical
Assuming the 90 days horizon New Economy Fund is expected to generate 0.87 times more return on investment than Counterpoint Tactical. However, New Economy Fund is 1.15 times less risky than Counterpoint Tactical. It trades about 0.4 of its potential returns per unit of risk. Counterpoint Tactical Equity is currently generating about 0.21 per unit of risk. If you would invest 6,552 in New Economy Fund on September 16, 2024 and sell it today you would earn a total of 360.00 from holding New Economy Fund or generate 5.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New Economy Fund vs. Counterpoint Tactical Equity
Performance |
Timeline |
New Economy Fund |
Counterpoint Tactical |
New Economy and Counterpoint Tactical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Economy and Counterpoint Tactical
The main advantage of trading using opposite New Economy and Counterpoint Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Counterpoint Tactical 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 Counterpoint Tactical will offset losses from the drop in Counterpoint Tactical's long position.New Economy vs. Balanced Fund Investor | New Economy vs. Commonwealth Global Fund | New Economy vs. T Rowe Price | New Economy vs. T Rowe Price |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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