Correlation Between First American and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both First American and Pace Municipal 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 First American and Pace Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First American Funds and Pace Municipal Fixed, you can compare the effects of market volatilities on First American and Pace Municipal 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 First American with a short position of Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Pace Municipal.
Diversification Opportunities for First American and Pace Municipal
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Pace is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed and First American 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 First American Funds are associated (or correlated) with Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of First American i.e., First American and Pace Municipal go up and down completely randomly.
Pair Corralation between First American and Pace Municipal
If you would invest 1,213 in Pace Municipal Fixed on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Pace Municipal Fixed or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Funds vs. Pace Municipal Fixed
Performance |
| Timeline |
| First American Funds |
| Pace Municipal Fixed |
First American and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Pace Municipal
The main advantage of trading using opposite First American and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American position performs unexpectedly, Pace Municipal 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 Municipal will offset losses from the drop in Pace Municipal's long position.| First American vs. Ab Bond Inflation | First American vs. Fidelity Advisor 529 | First American vs. Blackrock Inflation Protected | First American vs. Ab Bond Inflation |
| Pace Municipal vs. Lifestyle Ii Moderate | Pace Municipal vs. Target Retirement 2040 | Pace Municipal vs. Dimensional Retirement Income | Pace Municipal vs. Moderately Aggressive Balanced |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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