Correlation Between Absolute Convertible and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Pacific Funds 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 Absolute Convertible and Pacific Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Pacific Funds Portfolio, you can compare the effects of market volatilities on Absolute Convertible and Pacific Funds 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 Absolute Convertible with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Pacific Funds.
Diversification Opportunities for Absolute Convertible and Pacific Funds
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Absolute and Pacific is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Pacific Funds Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Portfolio and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Portfolio has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Pacific Funds go up and down completely randomly.
Pair Corralation between Absolute Convertible and Pacific Funds
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.18 times less return on investment than Pacific Funds. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 5.49 times less risky than Pacific Funds. It trades about 0.44 of its potential returns per unit of risk. Pacific Funds Portfolio is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 895.00 in Pacific Funds Portfolio on September 12, 2024 and sell it today you would earn a total of 96.00 from holding Pacific Funds Portfolio or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Pacific Funds Portfolio
Performance |
| Timeline |
| Absolute Convertible |
| Pacific Funds Portfolio |
Absolute Convertible and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Pacific Funds
The main advantage of trading using opposite Absolute Convertible and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Absolute Convertible vs. Vy Goldman Sachs | Absolute Convertible vs. Invesco Gold Special | Absolute Convertible vs. Short Precious Metals | Absolute Convertible vs. Franklin Gold Precious |
| Pacific Funds vs. Absolute Convertible Arbitrage | Pacific Funds vs. Allianzgi Convertible Income | Pacific Funds vs. Rationalpier 88 Convertible | Pacific Funds vs. Advent Claymore Convertible |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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