Correlation Between Technology Select and New Perspective
Can any of the company-specific risk be diversified away by investing in both Technology Select 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 Technology Select and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and New Perspective Fund, you can compare the effects of market volatilities on Technology Select 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 Technology Select with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and New Perspective.
Diversification Opportunities for Technology Select and New Perspective
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Technology and New is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Technology Select 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 Technology Select Sector 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 Technology Select i.e., Technology Select and New Perspective go up and down completely randomly.
Pair Corralation between Technology Select and New Perspective
Considering the 90-day investment horizon Technology Select Sector is expected to generate 1.67 times more return on investment than New Perspective. However, Technology Select is 1.67 times more volatile than New Perspective Fund. It trades about 0.1 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.07 per unit of risk. If you would invest 26,593 in Technology Select Sector on August 16, 2025 and sell it today you would earn a total of 2,066 from holding Technology Select Sector or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology Select Sector vs. New Perspective Fund
Performance |
| Timeline |
| Technology Select Sector |
| New Perspective |
Technology Select and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and New Perspective
The main advantage of trading using opposite Technology Select and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select 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.| Technology Select vs. Vanguard High Dividend | Technology Select vs. Vanguard High Dividend | Technology Select vs. Vanguard Extended Market | Technology Select vs. iShares Core SP |
| New Perspective vs. New Perspective Fund | New Perspective vs. New Perspective Fund | New Perspective vs. New Perspective Fund | New Perspective vs. American Funds Fundamental |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |