Correlation Between Pace International and Americafirst Defensive
Can any of the company-specific risk be diversified away by investing in both Pace International and Americafirst Defensive 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 Americafirst Defensive 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 Americafirst Defensive Growth, you can compare the effects of market volatilities on Pace International and Americafirst Defensive 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 Americafirst Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Americafirst Defensive.
Diversification Opportunities for Pace International and Americafirst Defensive
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Americafirst is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Americafirst Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Defensive 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 Americafirst Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Defensive has no effect on the direction of Pace International i.e., Pace International and Americafirst Defensive go up and down completely randomly.
Pair Corralation between Pace International and Americafirst Defensive
Assuming the 90 days horizon Pace International Emerging is expected to under-perform the Americafirst Defensive. In addition to that, Pace International is 3.29 times more volatile than Americafirst Defensive Growth. It trades about -0.24 of its total potential returns per unit of risk. Americafirst Defensive Growth is currently generating about 0.12 per unit of volatility. If you would invest 927.00 in Americafirst Defensive Growth on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Americafirst Defensive Growth or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pace International Emerging vs. Americafirst Defensive Growth
Performance |
| Timeline |
| Pace International |
| Americafirst Defensive |
Pace International and Americafirst Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Americafirst Defensive
The main advantage of trading using opposite Pace International and Americafirst Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Americafirst Defensive 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 Americafirst Defensive will offset losses from the drop in Americafirst Defensive's long position.The idea behind Pace International Emerging and Americafirst Defensive Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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