Correlation Between New Perspective and American Funds

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

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Can any of the company-specific risk be diversified away by investing in both New Perspective and American Funds at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing New Perspective and American Funds into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for New Perspective and American Funds

0.8
Correlation
NP
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Very poor diversification

The 3 months correlation between CNPEX and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund Class 529 and American Funds Global Growth P in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and New Perspective 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 Perspective are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of New Perspective i.e. New Perspective and American Funds go up and down completely randomly.

Pair Corralation between New Perspective and American Funds

Assuming 30 trading days horizon, New Perspective is expected to generate 1.79 times more return on investment than American Funds. However, New Perspective is 1.79 times more volatile than American Funds Global. It trades about 0.03 of its potential returns per unit of risk. American Funds Global is currently generating about 0.01 per unit of risk. If you would invest  4,534  in New Perspective on May 3, 2020 and sell it today you would lose (73.00)  from holding New Perspective or give up 1.61% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

New Perspective Fund Class 529  vs.  American Funds Global Growth P

 Performance (%) 
      Timeline 
New Perspective 
11

Risk-Adjusted Fund Performance

Compared to the overall equity markets, risk-adjusted returns on investments in New Perspective are ranked lower than 1 (%) of all funds and portfolios of funds over the last 30 days. Inspite fairly weak basic indicators, New Perspective may actually be approaching a critical reversion point that can send shares even higher in July 2020.
American Funds Global 
00

Risk-Adjusted Fund Performance

Over the last 30 days American Funds Global has generated negative risk-adjusted returns adding no value to fund investors. Inspite fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short term losses for the investors.

New Perspective and American Funds Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Global Correlations module to find global opportunities by holding instruments from different markets.


 
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