Correlation Between International Fund and Pear Tree
Can any of the company-specific risk be diversified away by investing in both International Fund 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 Fund 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 Fund International and Pear Tree Polaris, you can compare the effects of market volatilities on International Fund 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 Fund with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Pear Tree.
Diversification Opportunities for International Fund and Pear Tree
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Pear is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation 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 Fund 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 Fund International 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 Fund i.e., International Fund and Pear Tree go up and down completely randomly.
Pair Corralation between International Fund and Pear Tree
Assuming the 90 days horizon International Fund is expected to generate 1.08 times less return on investment than Pear Tree. In addition to that, International Fund is 1.19 times more volatile than Pear Tree Polaris. It trades about 0.04 of its total potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.06 per unit of volatility. If you would invest 1,942 in Pear Tree Polaris on August 27, 2024 and sell it today you would earn a total of 418.00 from holding Pear Tree Polaris or generate 21.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fund Internation vs. Pear Tree Polaris
Performance |
| Timeline |
| International Fund |
| Pear Tree Polaris |
International Fund and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fund and Pear Tree
The main advantage of trading using opposite International Fund and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund 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 Fund vs. Large Cap Growth | International Fund vs. Parnassus Mid Cap | International Fund vs. Parnassus E Equity | International Fund vs. Doubleline Total Return |
| Pear Tree vs. Loomis Sayles Growth | Pear Tree vs. Edgewood Growth Fund | Pear Tree vs. Nuance Mid Cap | Pear Tree vs. Parnassus Mid Cap |
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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