Correlation Between Paradigm Select and Towle Deep
Can any of the company-specific risk be diversified away by investing in both Paradigm Select and Towle Deep 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 Towle Deep 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 Towle Deep Value, you can compare the effects of market volatilities on Paradigm Select and Towle Deep 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 Towle Deep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm Select and Towle Deep.
Diversification Opportunities for Paradigm Select and Towle Deep
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Paradigm and Towle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm Select Fund and Towle Deep Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towle Deep 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 Towle Deep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towle Deep Value has no effect on the direction of Paradigm Select i.e., Paradigm Select and Towle Deep go up and down completely randomly.
Pair Corralation between Paradigm Select and Towle Deep
Assuming the 90 days horizon Paradigm Select Fund is expected to generate 0.89 times more return on investment than Towle Deep. However, Paradigm Select Fund is 1.12 times less risky than Towle Deep. It trades about 0.1 of its potential returns per unit of risk. Towle Deep Value is currently generating about 0.04 per unit of risk. If you would invest 5,960 in Paradigm Select Fund on August 29, 2024 and sell it today you would earn a total of 2,471 from holding Paradigm Select Fund or generate 41.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paradigm Select Fund vs. Towle Deep Value
Performance |
| Timeline |
| Paradigm Select |
| Towle Deep Value |
Paradigm Select and Towle Deep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradigm Select and Towle Deep
The main advantage of trading using opposite Paradigm Select and Towle Deep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm Select position performs unexpectedly, Towle Deep 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 Towle Deep will offset losses from the drop in Towle Deep'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 |
| Towle Deep vs. Vanguard Small Cap Value | Towle Deep vs. Vanguard Small Cap Value | Towle Deep vs. American Beacon Small |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |