Correlation Between Pax Balanced and Value Line
Can any of the company-specific risk be diversified away by investing in both Pax Balanced and Value Line 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 Value Line 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 Value Line Income, you can compare the effects of market volatilities on Pax Balanced and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Balanced and Value Line.
Diversification Opportunities for Pax Balanced and Value Line
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pax and Value is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pax Balanced Fund and Value Line Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Income 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Income has no effect on the direction of Pax Balanced i.e., Pax Balanced and Value Line go up and down completely randomly.
Pair Corralation between Pax Balanced and Value Line
Assuming the 90 days horizon Pax Balanced is expected to generate 4.28 times less return on investment than Value Line. But when comparing it to its historical volatility, Pax Balanced Fund is 1.89 times less risky than Value Line. It trades about 0.1 of its potential returns per unit of risk. Value Line Income is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Value Line Income on August 31, 2024 and sell it today you would earn a total of 59.00 from holding Value Line Income or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Balanced Fund vs. Value Line Income
Performance |
| Timeline |
| Pax Balanced |
| Value Line Income |
Pax Balanced and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Balanced and Value Line
The main advantage of trading using opposite Pax Balanced and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Balanced position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line'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 |
| Value Line vs. American Funds American | Value Line vs. American Funds American | Value Line vs. American Balanced | Value Line vs. American Balanced Fund |
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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