Correlation Between Pace Municipal and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Regional Bank 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 Regional Bank 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 Regional Bank Fund, you can compare the effects of market volatilities on Pace Municipal and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Regional Bank.
Diversification Opportunities for Pace Municipal and Regional Bank
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Regional is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Pace Municipal i.e., Pace Municipal and Regional Bank go up and down completely randomly.
Pair Corralation between Pace Municipal and Regional Bank
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.12 times more return on investment than Regional Bank. However, Pace Municipal Fixed is 8.09 times less risky than Regional Bank. It trades about -0.24 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.5 per unit of risk. If you would invest 1,222 in Pace Municipal Fixed on September 25, 2024 and sell it today you would lose (13.00) from holding Pace Municipal Fixed or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Regional Bank Fund
Performance |
| Timeline |
| Pace Municipal Fixed |
| Regional Bank |
Pace Municipal and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Regional Bank
The main advantage of trading using opposite Pace Municipal and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Pace Municipal vs. Transamerica Intermediate Muni | Pace Municipal vs. Franklin High Yield | Pace Municipal vs. California High Yield Municipal | Pace Municipal vs. Dws Government Money |
| Regional Bank vs. Alliancebernstein National Municipal | Regional Bank vs. Ishares Municipal Bond | Regional Bank vs. Pace Municipal Fixed | Regional Bank vs. Bbh Intermediate Municipal |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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