Correlation Between Pax Global and Pax Balanced
Can any of the company-specific risk be diversified away by investing in both Pax Global and Pax Balanced 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 Pax Global and Pax Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Global Environmental and Pax Balanced Fund, you can compare the effects of market volatilities on Pax Global and Pax Balanced 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 Pax Global with a short position of Pax Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Global and Pax Balanced.
Diversification Opportunities for Pax Global and Pax Balanced
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pax and Pax is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pax Global Environmental and Pax Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Balanced and Pax Global 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 Pax Global Environmental are associated (or correlated) with Pax Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Balanced has no effect on the direction of Pax Global i.e., Pax Global and Pax Balanced go up and down completely randomly.
Pair Corralation between Pax Global and Pax Balanced
Assuming the 90 days horizon Pax Global is expected to generate 1.36 times less return on investment than Pax Balanced. In addition to that, Pax Global is 1.83 times more volatile than Pax Balanced Fund. It trades about 0.04 of its total potential returns per unit of risk. Pax Balanced Fund is currently generating about 0.1 per unit of volatility. If you would invest 2,521 in Pax Balanced Fund on August 28, 2024 and sell it today you would earn a total of 174.00 from holding Pax Balanced Fund or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Global Environmental vs. Pax Balanced Fund
Performance |
| Timeline |
| Pax Global Environmental |
| Pax Balanced |
Pax Global and Pax Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Global and Pax Balanced
The main advantage of trading using opposite Pax Global and Pax Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Global position performs unexpectedly, Pax Balanced 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 Pax Balanced will offset losses from the drop in Pax Balanced's long position.| Pax Global vs. Pax E Bond | Pax Global vs. Pax Esg Beta | Pax Global vs. Pax Global Opportunities | Pax Global vs. Pax High Yield |
| Pax Balanced vs. Pax Esg Beta | Pax Balanced vs. Pax High Yield | Pax Balanced vs. Domini Impact Equity | Pax Balanced vs. Neuberger Berman Socially |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |