Correlation Between Paradigm Select and Paradigm Value
Can any of the company-specific risk be diversified away by investing in both Paradigm Select and Paradigm 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 Paradigm Select and Paradigm Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paradigm Select Fund and Paradigm Value Fund, you can compare the effects of market volatilities on Paradigm Select and Paradigm 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 Paradigm Select with a short position of Paradigm Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm Select and Paradigm Value.
Diversification Opportunities for Paradigm Select and Paradigm Value
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Paradigm and Paradigm is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm Select Fund and Paradigm Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Value and Paradigm Select 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 Paradigm Select Fund are associated (or correlated) with Paradigm Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Value has no effect on the direction of Paradigm Select i.e., Paradigm Select and Paradigm Value go up and down completely randomly.
Pair Corralation between Paradigm Select and Paradigm Value
Assuming the 90 days horizon Paradigm Select Fund is expected to generate 0.77 times more return on investment than Paradigm Value. However, Paradigm Select Fund is 1.3 times less risky than Paradigm Value. It trades about 0.28 of its potential returns per unit of risk. Paradigm Value Fund is currently generating about 0.19 per unit of risk. If you would invest 7,838 in Paradigm Select Fund on August 26, 2024 and sell it today you would earn a total of 570.00 from holding Paradigm Select Fund or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paradigm Select Fund vs. Paradigm Value Fund
Performance |
| Timeline |
| Paradigm Select |
| Paradigm Value |
Paradigm Select and Paradigm Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradigm Select and Paradigm Value
The main advantage of trading using opposite Paradigm Select and Paradigm Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm Select position performs unexpectedly, Paradigm 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 Paradigm Value will offset losses from the drop in Paradigm Value's long position.| Paradigm Select vs. Paradigm Micro Cap Fund | Paradigm Select vs. Paradigm Value Fund | Paradigm Select vs. Needham Small Cap | Paradigm Select vs. Touchstone Mid Cap |
| Paradigm Value vs. Royce Small Cap Value | Paradigm Value vs. Royce Smaller Companies Growth | Paradigm Value vs. Kinetics Paradigm Fund | Paradigm Value vs. Tcw Relative Value |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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