Correlation Between Pax Balanced and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Pax Balanced and New Alternatives 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 Pax Balanced and New Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Balanced Fund and New Alternatives Fund, you can compare the effects of market volatilities on Pax Balanced and New Alternatives 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 Pax Balanced with a short position of New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Balanced and New Alternatives.
Diversification Opportunities for Pax Balanced and New Alternatives
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pax and New is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pax Balanced Fund and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives and Pax Balanced 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 Pax Balanced Fund are associated (or correlated) with New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Pax Balanced i.e., Pax Balanced and New Alternatives go up and down completely randomly.
Pair Corralation between Pax Balanced and New Alternatives
Assuming the 90 days horizon Pax Balanced Fund is expected to generate 0.35 times more return on investment than New Alternatives. However, Pax Balanced Fund is 2.9 times less risky than New Alternatives. It trades about 0.05 of its potential returns per unit of risk. New Alternatives Fund is currently generating about -0.19 per unit of risk. If you would invest 2,660 in Pax Balanced Fund on August 26, 2024 and sell it today you would earn a total of 12.00 from holding Pax Balanced Fund or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Balanced Fund vs. New Alternatives Fund
Performance |
| Timeline |
| Pax Balanced |
| New Alternatives |
Pax Balanced and New Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Balanced and New Alternatives
The main advantage of trading using opposite Pax Balanced and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Balanced position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' long position.| Pax Balanced vs. Pax Esg Beta | Pax Balanced vs. Pax High Yield | Pax Balanced vs. Domini Impact Equity | Pax Balanced vs. Neuberger Berman Socially |
| New Alternatives vs. Guinness Atkinson Alternative | New Alternatives vs. Calvert Global Energy | New Alternatives vs. Portfolio 21 Global | New Alternatives vs. Green Century 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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