Correlation Between Pace International and Causeway International
Can any of the company-specific risk be diversified away by investing in both Pace International and Causeway International 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 Pace International and Causeway International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Emerging and Causeway International Opportunities, you can compare the effects of market volatilities on Pace International and Causeway International 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 Pace International with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Causeway International.
Diversification Opportunities for Pace International and Causeway International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Causeway is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Causeway International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Pace International 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 Pace International Emerging are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Pace International i.e., Pace International and Causeway International go up and down completely randomly.
Pair Corralation between Pace International and Causeway International
Assuming the 90 days horizon Pace International is expected to generate 2.05 times less return on investment than Causeway International. In addition to that, Pace International is 1.11 times more volatile than Causeway International Opportunities. It trades about 0.04 of its total potential returns per unit of risk. Causeway International Opportunities is currently generating about 0.08 per unit of volatility. If you would invest 1,275 in Causeway International Opportunities on August 30, 2024 and sell it today you would earn a total of 441.00 from holding Causeway International Opportunities or generate 34.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Causeway International Opportu
Performance |
| Timeline |
| Pace International |
| Causeway International |
Pace International and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Causeway International
The main advantage of trading using opposite Pace International and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| Pace International vs. Virtus Real Estate | Pace International vs. Versus Capital Multi Manager | Pace International vs. Fidelity Advisor Real | Pace International vs. John Hancock Variable |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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