Correlation Between NewFunds Low and NewFunds MAPPS

Can any of the company-specific risk be diversified away by investing in both NewFunds Low and NewFunds MAPPS 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 NewFunds MAPPS 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 NewFunds MAPPS Growth, you can compare the effects of market volatilities on NewFunds Low and NewFunds MAPPS 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 NewFunds MAPPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFunds Low and NewFunds MAPPS.

Diversification Opportunities for NewFunds Low and NewFunds MAPPS

0.86

Correlation Coefficient

NewFunds Low  NewFunds MAPPS

Very poor diversification

The 3 months correlation between NewFunds and NewFunds is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NewFunds Low Volatility and NewFunds MAPPS Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFunds MAPPS Growth 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 NewFunds MAPPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFunds MAPPS Growth has no effect on the direction of NewFunds Low i.e., NewFunds Low and NewFunds MAPPS go up and down completely randomly.

Pair Corralation between NewFunds Low and NewFunds MAPPS

Assuming the 90 days trading horizon NewFunds Low Volatility is expected to under-perform the NewFunds MAPPS. But the etf apears to be less risky and, when comparing its historical volatility, NewFunds Low Volatility is 1.17 times less risky than NewFunds MAPPS. The etf trades about -0.08 of its potential returns per unit of risk. The NewFunds MAPPS Growth is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  332,300  in NewFunds MAPPS Growth on October 23, 2024 and sell it today you would lose (4,500) from holding NewFunds MAPPS Growth or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

NewFunds Low Volatility  vs.  NewFunds MAPPS Growth

NewFunds Low Volatility

Risk-Adjusted Performance

0 of 100

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.

NewFunds MAPPS Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewFunds MAPPS Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, NewFunds MAPPS 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 NewFunds MAPPS

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

The idea behind NewFunds Low Volatility and NewFunds MAPPS Growth 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.