Correlation Between New Economy and Capital Income
Can any of the company-specific risk be diversified away by investing in both New Economy and Capital Income 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 Capital Income 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 Capital Income Builder, you can compare the effects of market volatilities on New Economy and Capital Income 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 Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Capital Income.
Diversification Opportunities for New Economy and Capital Income
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and Capital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of New Economy i.e., New Economy and Capital Income go up and down completely randomly.
Pair Corralation between New Economy and Capital Income
If you would invest 7,198 in Capital Income Builder on March 29, 2025 and sell it today you would earn a total of 360.00 from holding Capital Income Builder or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
New Economy Fund vs. Capital Income Builder
Performance |
| Timeline |
| New Economy Fund |
Risk-Adjusted Performance
OK
Weak | Strong |
| Capital Income Builder |
New Economy and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Capital Income
The main advantage of trading using opposite New Economy and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| New Economy vs. New Perspective Fund | New Economy vs. Growth Fund Of | New Economy vs. New World Fund | New Economy vs. American Funds Fundamental |
| Capital Income vs. Nt International Small Mid | Capital Income vs. Aqr Small Cap | Capital Income vs. Nationwide International Small | Capital Income vs. Needham Small Cap |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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