Correlation Between Pro-blend(r) Moderate and Pax High
Can any of the company-specific risk be diversified away by investing in both Pro-blend(r) Moderate and Pax High 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 Pro-blend(r) Moderate and Pax High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Blend Moderate Term and Pax High Yield, you can compare the effects of market volatilities on Pro-blend(r) Moderate and Pax High 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 Pro-blend(r) Moderate with a short position of Pax High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro-blend(r) Moderate and Pax High.
Diversification Opportunities for Pro-blend(r) Moderate and Pax High
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pro-blend(r) and Pax is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term and Pax High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax High Yield and Pro-blend(r) Moderate 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 Pro Blend Moderate Term are associated (or correlated) with Pax High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax High Yield has no effect on the direction of Pro-blend(r) Moderate i.e., Pro-blend(r) Moderate and Pax High go up and down completely randomly.
Pair Corralation between Pro-blend(r) Moderate and Pax High
Assuming the 90 days horizon Pro Blend Moderate Term is expected to generate 1.72 times more return on investment than Pax High. However, Pro-blend(r) Moderate is 1.72 times more volatile than Pax High Yield. It trades about 0.15 of its potential returns per unit of risk. Pax High Yield is currently generating about 0.19 per unit of risk. If you would invest 1,282 in Pro Blend Moderate Term on September 1, 2024 and sell it today you would earn a total of 210.00 from holding Pro Blend Moderate Term or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pro Blend Moderate Term vs. Pax High Yield
Performance |
| Timeline |
| Pro-blend(r) Moderate |
| Pax High Yield |
Pro-blend(r) Moderate and Pax High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro-blend(r) Moderate and Pax High
The main advantage of trading using opposite Pro-blend(r) Moderate and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro-blend(r) Moderate position performs unexpectedly, Pax High 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 High will offset losses from the drop in Pax High's long position.| Pro-blend(r) Moderate vs. Pro Blend Servative Term | Pro-blend(r) Moderate vs. Pro Blend Extended Term | Pro-blend(r) Moderate vs. Pro Blend Maximum Term | Pro-blend(r) Moderate vs. Greenspring Fund Retail |
| Pax High vs. Inflation Protected Bond Fund | Pax High vs. Ab Bond Inflation | Pax High vs. Maryland Tax Free Bond | Pax High vs. Versatile Bond Portfolio |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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