Correlation Between Pax Balanced and Pax Global
Can any of the company-specific risk be diversified away by investing in both Pax Balanced and Pax Global 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 Pax Global 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 Pax Global Environmental, you can compare the effects of market volatilities on Pax Balanced and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Balanced and Pax Global.
Diversification Opportunities for Pax Balanced and Pax Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pax and Pax is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pax Balanced Fund and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of Pax Balanced i.e., Pax Balanced and Pax Global go up and down completely randomly.
Pair Corralation between Pax Balanced and Pax Global
Assuming the 90 days horizon Pax Balanced is expected to generate 1.48 times less return on investment than Pax Global. But when comparing it to its historical volatility, Pax Balanced Fund is 1.74 times less risky than Pax Global. It trades about 0.14 of its potential returns per unit of risk. Pax Global Environmental is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,855 in Pax Global Environmental on August 25, 2024 and sell it today you would earn a total of 611.00 from holding Pax Global Environmental or generate 32.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Balanced Fund vs. Pax Global Environmental
Performance |
| Timeline |
| Pax Balanced |
| Pax Global Environmental |
Pax Balanced and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Balanced and Pax Global
The main advantage of trading using opposite Pax Balanced and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Balanced position performs unexpectedly, Pax Global 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 Global will offset losses from the drop in Pax Global's 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 |
| Pax Global vs. Pax Ellevate Global | Pax Global vs. Pax Small Cap | Pax Global vs. Green Century Balanced | Pax Global vs. Portfolio 21 Global |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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