Correlation Between Pace Small/medium and Small-cap Value
Can any of the company-specific risk be diversified away by investing in both Pace Small/medium and Small-cap Value 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 Small/medium and Small-cap Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Value and Small Cap Value Series, you can compare the effects of market volatilities on Pace Small/medium and Small-cap Value 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 Small/medium with a short position of Small-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and Small-cap Value.
Diversification Opportunities for Pace Small/medium and Small-cap Value
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Small-cap is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Small Cap Value Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Pace Small/medium 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 Smallmedium Value are associated (or correlated) with Small-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Pace Small/medium i.e., Pace Small/medium and Small-cap Value go up and down completely randomly.
Pair Corralation between Pace Small/medium and Small-cap Value
Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 0.82 times more return on investment than Small-cap Value. However, Pace Smallmedium Value is 1.23 times less risky than Small-cap Value. It trades about -0.24 of its potential returns per unit of risk. Small Cap Value Series is currently generating about -0.24 per unit of risk. If you would invest 1,782 in Pace Smallmedium Value on November 29, 2024 and sell it today you would lose (78.00) from holding Pace Smallmedium Value or give up 4.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Smallmedium Value vs. Small Cap Value Series
Performance |
| Timeline |
| Pace Smallmedium Value |
| Small Cap Value |
Pace Small/medium and Small-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Small/medium and Small-cap Value
The main advantage of trading using opposite Pace Small/medium and Small-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Small/medium position performs unexpectedly, Small-cap Value 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 Small-cap Value will offset losses from the drop in Small-cap Value's long position.| Pace Small/medium vs. Alpsalerian Energy Infrastructure | Pace Small/medium vs. Vanguard Energy Index | Pace Small/medium vs. World Energy Fund | Pace Small/medium vs. Thrivent Natural Resources |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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