Correlation Between Dana Large and Pace Small/medium
Can any of the company-specific risk be diversified away by investing in both Dana Large and Pace Small/medium 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 Dana Large and Pace Small/medium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Pace Smallmedium Value, you can compare the effects of market volatilities on Dana Large and Pace Small/medium 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 Dana Large with a short position of Pace Small/medium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Pace Small/medium.
Diversification Opportunities for Dana Large and Pace Small/medium
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dana and Pace is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value and Dana Large 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 Dana Large Cap are associated (or correlated) with Pace Small/medium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of Dana Large i.e., Dana Large and Pace Small/medium go up and down completely randomly.
Pair Corralation between Dana Large and Pace Small/medium
Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Pace Small/medium. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dana Large Cap is 1.06 times less risky than Pace Small/medium. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Pace Smallmedium Value is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest 1,649 in Pace Smallmedium Value on January 6, 2025 and sell it today you would lose (213.00) from holding Pace Smallmedium Value or give up 12.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Pace Smallmedium Value
Performance |
| Timeline |
| Dana Large Cap |
| Pace Smallmedium Value |
Dana Large and Pace Small/medium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Pace Small/medium
The main advantage of trading using opposite Dana Large and Pace Small/medium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, Pace Small/medium 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 Pace Small/medium will offset losses from the drop in Pace Small/medium's long position.| Dana Large vs. Rbc Ultra Short Fixed | Dana Large vs. Old Westbury Fixed | Dana Large vs. Ab Bond Inflation | Dana Large vs. Ambrus Core Bond |
| Pace Small/medium vs. Doubleline Total Return | Pace Small/medium vs. Pace Strategic Fixed | Pace Small/medium vs. Scout E Bond | Pace Small/medium vs. Old Westbury Fixed |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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