Correlation Between Auer Growth and Pax Balanced
Can any of the company-specific risk be diversified away by investing in both Auer Growth and Pax Balanced 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 Auer Growth and Pax Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auer Growth Fund and Pax Balanced Fund, you can compare the effects of market volatilities on Auer Growth and Pax Balanced 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 Auer Growth with a short position of Pax Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Pax Balanced.
Diversification Opportunities for Auer Growth and Pax Balanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auer and Pax is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Pax Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Balanced and Auer Growth 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 Auer Growth Fund are associated (or correlated) with Pax Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Balanced has no effect on the direction of Auer Growth i.e., Auer Growth and Pax Balanced go up and down completely randomly.
Pair Corralation between Auer Growth and Pax Balanced
Assuming the 90 days horizon Auer Growth Fund is expected to generate 2.09 times more return on investment than Pax Balanced. However, Auer Growth is 2.09 times more volatile than Pax Balanced Fund. It trades about 0.11 of its potential returns per unit of risk. Pax Balanced Fund is currently generating about 0.1 per unit of risk. If you would invest 1,724 in Auer Growth Fund on August 30, 2024 and sell it today you would earn a total of 42.00 from holding Auer Growth Fund or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auer Growth Fund vs. Pax Balanced Fund
Performance |
| Timeline |
| Auer Growth Fund |
| Pax Balanced |
Auer Growth and Pax Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auer Growth and Pax Balanced
The main advantage of trading using opposite Auer Growth and Pax Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auer Growth position performs unexpectedly, Pax Balanced 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 Pax Balanced will offset losses from the drop in Pax Balanced's long position.| Auer Growth vs. Vanguard Small Cap Value | Auer Growth vs. Vanguard Small Cap Value | Auer Growth vs. American Beacon Small |
| Pax Balanced vs. Calamos Dynamic Convertible | Pax Balanced vs. Ambrus Core Bond | Pax Balanced vs. Victory High Yield | Pax Balanced vs. Artisan High Income |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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