Correlation Between NewFunds Low and AfricaRhodium ETF

Can any of the company-specific risk be diversified away by investing in both NewFunds Low and AfricaRhodium ETF 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 NewFunds Low and AfricaRhodium ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NewFunds Low Volatility and AfricaRhodium ETF, you can compare the effects of market volatilities on NewFunds Low and AfricaRhodium ETF 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 NewFunds Low with a short position of AfricaRhodium ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFunds Low and AfricaRhodium ETF.

Diversification Opportunities for NewFunds Low and AfricaRhodium ETF

-0.62

Correlation Coefficient

NewFunds Low  AfricaRhodium ETF

Excellent diversification

The 3 months correlation between NewFunds and AfricaRhodium is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NewFunds Low Volatility and AfricaRhodium ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfricaRhodium ETF and NewFunds Low 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 NewFunds Low Volatility are associated (or correlated) with AfricaRhodium ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfricaRhodium ETF has no effect on the direction of NewFunds Low i.e., NewFunds Low and AfricaRhodium ETF go up and down completely randomly.

Pair Corralation between NewFunds Low and AfricaRhodium ETF

Assuming the 90 days trading horizon NewFunds Low Volatility is expected to under-perform the AfricaRhodium ETF. But the etf apears to be less risky and, when comparing its historical volatility, NewFunds Low Volatility is 1.98 times less risky than AfricaRhodium ETF. The etf trades about -0.07 of its potential returns per unit of risk. The AfricaRhodium ETF is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,691,100  in AfricaRhodium ETF on December 2, 2024 and sell it today you would earn a total of  87,300  from holding AfricaRhodium ETF or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.55%
Values	Daily Returns

NewFunds Low Volatility  vs.  AfricaRhodium ETF

NewFunds Low Volatility

Risk-Adjusted Performance

Very Weak

Over the last 90 days NewFunds Low Volatility has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, NewFunds Low is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AfricaRhodium ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AfricaRhodium ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AfricaRhodium ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NewFunds Low and AfricaRhodium ETF

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

The idea behind NewFunds Low Volatility and AfricaRhodium ETF 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.