Correlation Between Pace Municipal and Continental Small
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Continental Small 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 Municipal and Continental Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Continental Small Pany, you can compare the effects of market volatilities on Pace Municipal and Continental Small 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 Municipal with a short position of Continental Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Continental Small.
Diversification Opportunities for Pace Municipal and Continental Small
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Continental is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Continental Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Small Pany and Pace Municipal 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 Municipal Fixed are associated (or correlated) with Continental Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Small Pany has no effect on the direction of Pace Municipal i.e., Pace Municipal and Continental Small go up and down completely randomly.
Pair Corralation between Pace Municipal and Continental Small
Assuming the 90 days horizon Pace Municipal is expected to generate 3.03 times less return on investment than Continental Small. But when comparing it to its historical volatility, Pace Municipal Fixed is 5.32 times less risky than Continental Small. It trades about 0.08 of its potential returns per unit of risk. Continental Small Pany is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Continental Small Pany on September 12, 2024 and sell it today you would earn a total of 544.00 from holding Continental Small Pany or generate 21.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Continental Small Pany
Performance |
| Timeline |
| Pace Municipal Fixed |
| Continental Small Pany |
Pace Municipal and Continental Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Continental Small
The main advantage of trading using opposite Pace Municipal and Continental Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Continental Small 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 Continental Small will offset losses from the drop in Continental Small's long position.| Pace Municipal vs. Scharf Global Opportunity | Pace Municipal vs. Ab Value Fund | Pace Municipal vs. Arrow Managed Futures | Pace Municipal vs. Materials Portfolio Fidelity |
| Continental Small vs. Oklahoma Municipal Fund | Continental Small vs. Franklin High Yield | Continental Small vs. T Rowe Price | Continental Small vs. Pace Municipal Fixed |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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