Correlation Between Absolute Convertible and Palmer Square
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Palmer Square 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 Palmer Square 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 Palmer Square Ssi, you can compare the effects of market volatilities on Absolute Convertible and Palmer Square 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 Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Palmer Square.
Diversification Opportunities for Absolute Convertible and Palmer Square
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Absolute and Palmer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Palmer Square Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ssi 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 Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ssi has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Palmer Square go up and down completely randomly.
Pair Corralation between Absolute Convertible and Palmer Square
Assuming the 90 days horizon Absolute Convertible is expected to generate 2.2 times less return on investment than Palmer Square. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 1.43 times less risky than Palmer Square. It trades about 0.44 of its potential returns per unit of risk. Palmer Square Ssi is currently generating about 0.68 of returns per unit of risk over similar time horizon. If you would invest 990.00 in Palmer Square Ssi on August 28, 2024 and sell it today you would earn a total of 10.00 from holding Palmer Square Ssi or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Palmer Square Ssi
Performance |
| Timeline |
| Absolute Convertible |
| Palmer Square Ssi |
Absolute Convertible and Palmer Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Palmer Square
The main advantage of trading using opposite Absolute Convertible and Palmer Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Palmer Square 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 Palmer Square will offset losses from the drop in Palmer Square's long position.| Absolute Convertible vs. Barings Active Short | Absolute Convertible vs. Ab Select Longshort | Absolute Convertible vs. Astor Longshort Fund | Absolute Convertible vs. Siit Ultra Short |
| Palmer Square vs. Pimco Short Asset | Palmer Square vs. Doubleline Low Duration | Palmer Square vs. Dfa One Year Fixed | Palmer Square vs. Short Term Income Fund |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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