Correlation Between New Perspective and Dynamic Us

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

By analyzing existing cross correlation between New Perspective Fund and Dynamic Opportunity Fund, you can compare the effects of market volatilities on New Perspective and Dynamic Us 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 Dynamic Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Dynamic Us.

Diversification Opportunities for New Perspective and Dynamic Us

0.88

Correlation Coefficient

New Perspective  Dynamic Us

Very poor diversification

The 3 months correlation between New and Dynamic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Dynamic Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Opportunity 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 Fund are associated (or correlated) with Dynamic Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Opportunity has no effect on the direction of New Perspective i.e., New Perspective and Dynamic Us go up and down completely randomly.

Pair Corralation between New Perspective and Dynamic Us

Assuming the 90 days horizon New Perspective is expected to generate 1.06 times less return on investment than Dynamic Us. In addition to that, New Perspective is 1.06 times more volatile than Dynamic Opportunity Fund. It trades about 0.19 of its total potential returns per unit of risk. Dynamic Opportunity Fund is currently generating about 0.22 per unit of volatility. If you would invest  1,458  in Dynamic Opportunity Fund on May 21, 2025 and sell it today you would earn a total of  122.00  from holding Dynamic Opportunity Fund or generate 8.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

New Perspective Fund  vs.  Dynamic Opportunity Fund

New Perspective

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Perspective Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, New Perspective may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Dynamic Opportunity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Opportunity Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dynamic Us may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with New Perspective and Dynamic Us

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

The idea behind New Perspective Fund and Dynamic Opportunity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.