Correlation Between NewFunds TRACI and NewFunds Low

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

By analyzing existing cross correlation between NewFunds TRACI 3 and NewFunds Low Volatility, you can compare the effects of market volatilities on NewFunds TRACI and NewFunds Low 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 TRACI with a short position of NewFunds Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFunds TRACI and NewFunds Low.

Diversification Opportunities for NewFunds TRACI and NewFunds Low

-0.13

Correlation Coefficient

NewFunds TRACI  NewFunds Low

Good diversification

The 3 months correlation between NewFunds and NewFunds is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding NewFunds TRACI 3 and NewFunds Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFunds Low Volatility and NewFunds TRACI 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 TRACI 3 are associated (or correlated) with NewFunds Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFunds Low Volatility has no effect on the direction of NewFunds TRACI i.e., NewFunds TRACI and NewFunds Low go up and down completely randomly.

Pair Corralation between NewFunds TRACI and NewFunds Low

Assuming the 90 days trading horizon NewFunds TRACI 3 is expected to generate 0.56 times more return on investment than NewFunds Low. However, NewFunds TRACI 3 is 1.79 times less risky than NewFunds Low. It trades about 0.08 of its potential returns per unit of risk. NewFunds Low Volatility is currently generating about -0.07 per unit of risk. If you would invest  350,200  in NewFunds TRACI 3 on December 2, 2024 and sell it today you would earn a total of  5,900  from holding NewFunds TRACI 3 or generate 1.68% return on investment over 90 days.

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

NewFunds TRACI 3  vs.  NewFunds Low Volatility

NewFunds TRACI 3

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewFunds TRACI 3 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NewFunds TRACI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with NewFunds TRACI and NewFunds Low

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

The idea behind NewFunds TRACI 3 and NewFunds Low Volatility 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 Anywhere module to track or share privately all of your investments from the convenience of any device.