Correlation Between Pace Small/medium and State Street
Can any of the company-specific risk be diversified away by investing in both Pace Small/medium and State Street 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 State Street 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 State Street Equity, you can compare the effects of market volatilities on Pace Small/medium and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and State Street.
Diversification Opportunities for Pace Small/medium and State Street
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and State is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and State Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Equity 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Equity has no effect on the direction of Pace Small/medium i.e., Pace Small/medium and State Street go up and down completely randomly.
Pair Corralation between Pace Small/medium and State Street
Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 1.31 times more return on investment than State Street. However, Pace Small/medium is 1.31 times more volatile than State Street Equity. It trades about 0.1 of its potential returns per unit of risk. State Street Equity is currently generating about 0.12 per unit of risk. If you would invest 1,919 in Pace Smallmedium Value on September 5, 2024 and sell it today you would earn a total of 277.00 from holding Pace Smallmedium Value or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Pace Smallmedium Value vs. State Street Equity
Performance |
| Timeline |
| Pace Smallmedium Value |
| State Street Equity |
Pace Small/medium and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Small/medium and State Street
The main advantage of trading using opposite Pace Small/medium and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Small/medium position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Pace Small/medium vs. Artisan Emerging Markets | Pace Small/medium vs. Ep Emerging Markets | Pace Small/medium vs. The Hartford Emerging | Pace Small/medium vs. Western Assets Emerging |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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