Correlation Between Pace Large and Stralem Equity
Can any of the company-specific risk be diversified away by investing in both Pace Large and Stralem Equity 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 Large and Stralem Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Value and Stralem Equity Fund, you can compare the effects of market volatilities on Pace Large and Stralem Equity 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 Large with a short position of Stralem Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Stralem Equity.
Diversification Opportunities for Pace Large and Stralem Equity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Pace and Stralem is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Stralem Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stralem Equity and Pace Large 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 Large Value are associated (or correlated) with Stralem Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stralem Equity has no effect on the direction of Pace Large i.e., Pace Large and Stralem Equity go up and down completely randomly.
Pair Corralation between Pace Large and Stralem Equity
Assuming the 90 days horizon Pace Large Value is expected to generate 0.83 times more return on investment than Stralem Equity. However, Pace Large Value is 1.2 times less risky than Stralem Equity. It trades about -0.09 of its potential returns per unit of risk. Stralem Equity Fund is currently generating about -0.18 per unit of risk. If you would invest 2,320 in Pace Large Value on September 12, 2024 and sell it today you would lose (22.00) from holding Pace Large Value or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Large Value vs. Stralem Equity Fund
Performance |
| Timeline |
| Pace Large Value |
| Stralem Equity |
Pace Large and Stralem Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Large and Stralem Equity
The main advantage of trading using opposite Pace Large and Stralem Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large position performs unexpectedly, Stralem Equity 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 Stralem Equity will offset losses from the drop in Stralem Equity's long position.| Pace Large vs. Vanguard Value Index | Pace Large vs. Dodge Cox Stock | Pace Large vs. American Mutual Fund | Pace Large vs. American Funds American |
| Stralem Equity vs. Fidelity Series 1000 | Stralem Equity vs. Virtus Nfj Large Cap | Stralem Equity vs. Qs Large Cap | Stralem Equity vs. Large Cap Growth Profund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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