Correlation Between Tortoise Energy and New Perspective

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

By analyzing existing cross correlation between Tortoise Energy Independence and New Perspective Fund, you can compare the effects of market volatilities on Tortoise Energy and New Perspective 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 Tortoise Energy with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tortoise Energy and New Perspective.

Diversification Opportunities for Tortoise Energy and New Perspective

0.54

Correlation Coefficient

Tortoise Energy  New Perspective

Very weak diversification

The 3 months correlation between Tortoise and New is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Energy Independence and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Tortoise Energy 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 Tortoise Energy Independence are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Tortoise Energy i.e., Tortoise Energy and New Perspective go up and down completely randomly.

Pair Corralation between Tortoise Energy and New Perspective

Assuming the 90 days horizon Tortoise Energy Independence is expected to generate 1.69 times more return on investment than New Perspective. However, Tortoise Energy is 1.69 times more volatile than New Perspective Fund. It trades about 0.2 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.14 per unit of risk. If you would invest  3,842  in Tortoise Energy Independence on September 4, 2024 and sell it today you would earn a total of  620.00  from holding Tortoise Energy Independence or generate 16.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Tortoise Energy Independence  vs.  New Perspective Fund

Tortoise Energy Inde

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Independence are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unfluctuating basic indicators, Tortoise Energy showed solid returns over the last few months and may actually be approaching a breakup point.

New Perspective

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Perspective Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, New Perspective is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tortoise Energy and New Perspective

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

The idea behind Tortoise Energy Independence and New Perspective Fund 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 CEOs Directory module to screen CEOs from public companies around the world.