Correlation Between New Economy and Edgewood Growth
Can any of the company-specific risk be diversified away by investing in both New Economy and Edgewood Growth 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 New Economy and Edgewood Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Edgewood Growth Fund, you can compare the effects of market volatilities on New Economy and Edgewood Growth 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 Economy with a short position of Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Edgewood Growth.
Diversification Opportunities for New Economy and Edgewood Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Edgewood is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth and New Economy 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 Economy Fund are associated (or correlated) with Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of New Economy i.e., New Economy and Edgewood Growth go up and down completely randomly.
Pair Corralation between New Economy and Edgewood Growth
Assuming the 90 days horizon New Economy Fund is expected to generate 0.86 times more return on investment than Edgewood Growth. However, New Economy Fund is 1.16 times less risky than Edgewood Growth. It trades about -0.17 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about -0.21 per unit of risk. If you would invest 5,246 in New Economy Fund on January 25, 2024 and sell it today you would lose (195.00) from holding New Economy Fund or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Edgewood Growth Fund
Performance |
| Timeline |
| New Economy Fund |
| Edgewood Growth |
New Economy and Edgewood Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Edgewood Growth
The main advantage of trading using opposite New Economy and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Edgewood Growth 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 Edgewood Growth will offset losses from the drop in Edgewood Growth's long position.| New Economy vs. Marsico 21st Century | New Economy vs. Northern Small Cap | New Economy vs. Aberdeen Select International | New Economy vs. HUMANA INC |
| Edgewood Growth vs. Amana Income Fund | Edgewood Growth vs. Amana Income Fund | Edgewood Growth vs. Amana Developing World | Edgewood Growth vs. Amana Growth Fund |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |