Correlation Between International Stock and Pear Tree
Can any of the company-specific risk be diversified away by investing in both International Stock and Pear Tree 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 International Stock and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Stock Fund and Pear Tree Polaris, you can compare the effects of market volatilities on International Stock and Pear Tree 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 International Stock with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Stock and Pear Tree.
Diversification Opportunities for International Stock and Pear Tree
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Pear is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding International Stock Fund and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and International Stock 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 International Stock Fund are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of International Stock i.e., International Stock and Pear Tree go up and down completely randomly.
Pair Corralation between International Stock and Pear Tree
Assuming the 90 days horizon International Stock Fund is expected to generate 1.16 times more return on investment than Pear Tree. However, International Stock is 1.16 times more volatile than Pear Tree Polaris. It trades about -0.18 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.21 per unit of risk. If you would invest 2,465 in International Stock Fund on August 30, 2024 and sell it today you would lose (92.00) from holding International Stock Fund or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Stock Fund vs. Pear Tree Polaris
Performance |
| Timeline |
| International Stock |
| Pear Tree Polaris |
International Stock and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Stock and Pear Tree
The main advantage of trading using opposite International Stock and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Stock position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| International Stock vs. Dreyfus High Yield | International Stock vs. Dreyfusthe Boston Pany | International Stock vs. Dreyfus International Bond | International Stock vs. Dreyfus International Bond |
| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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