Correlation Between Locorr Market and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Locorr Market 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 Locorr Market and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Locorr Market Trend and Pear Tree Polaris, you can compare the effects of market volatilities on Locorr Market 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 Locorr Market with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Locorr Market and Pear Tree.
Diversification Opportunities for Locorr Market and Pear Tree
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Locorr and Pear is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Market Trend 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 Locorr Market 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 Locorr Market Trend 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 Locorr Market i.e., Locorr Market and Pear Tree go up and down completely randomly.
Pair Corralation between Locorr Market and Pear Tree
Assuming the 90 days horizon Locorr Market Trend is expected to generate 0.88 times more return on investment than Pear Tree. However, Locorr Market Trend is 1.14 times less risky than Pear Tree. It trades about 0.19 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.14 per unit of risk. If you would invest 1,045 in Locorr Market Trend on September 2, 2024 and sell it today you would earn a total of 30.00 from holding Locorr Market Trend or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Locorr Market Trend vs. Pear Tree Polaris
Performance |
| Timeline |
| Locorr Market Trend |
| Pear Tree Polaris |
Locorr Market and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Locorr Market and Pear Tree
The main advantage of trading using opposite Locorr Market and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Locorr Market 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.| Locorr Market vs. Ab Government Exchange | Locorr Market vs. Government Securities Fund | Locorr Market vs. Us Government Securities | Locorr Market vs. Prudential Government Income |
| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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