Correlation Between Acm Tactical and New World

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

By analyzing existing cross correlation between Acm Tactical Income and New World Fund, you can compare the effects of market volatilities on Acm Tactical and New World 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 Acm Tactical with a short position of New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acm Tactical and New World.

Diversification Opportunities for Acm Tactical and New World

0.78

Correlation Coefficient

Acm Tactical  New World

Poor diversification

The 3 months correlation between Acm and New is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Acm Tactical Income and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund and Acm Tactical 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 Acm Tactical Income are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Acm Tactical i.e., Acm Tactical and New World go up and down completely randomly.

Pair Corralation between Acm Tactical and New World

Assuming the 90 days horizon Acm Tactical Income is expected to generate 0.23 times more return on investment than New World. However, Acm Tactical Income is 4.33 times less risky than New World. It trades about -0.21 of its potential returns per unit of risk. New World Fund is currently generating about -0.05 per unit of risk. If you would invest  888.00  in Acm Tactical Income on January 30, 2024 and sell it today you would lose (7.00) from holding Acm Tactical Income or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Acm Tactical Income  vs.  New World Fund

Acm Tactical Me

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acm Tactical Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Acm Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

New World Fund

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New World Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, New World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acm Tactical and New World

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

The idea behind Acm Tactical Income and New World 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.