Correlation Between Pace High and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Pace High and Applied Finance 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 High and Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Applied Finance Core, you can compare the effects of market volatilities on Pace High and Applied Finance 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 High with a short position of Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Applied Finance.
Diversification Opportunities for Pace High and Applied Finance
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Applied is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core and Pace High 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 High Yield are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Pace High i.e., Pace High and Applied Finance go up and down completely randomly.
Pair Corralation between Pace High and Applied Finance
Assuming the 90 days horizon Pace High is expected to generate 1.31 times less return on investment than Applied Finance. But when comparing it to its historical volatility, Pace High Yield is 3.26 times less risky than Applied Finance. It trades about 0.18 of its potential returns per unit of risk. Applied Finance Core is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Applied Finance Core on September 12, 2024 and sell it today you would earn a total of 272.00 from holding Applied Finance Core or generate 28.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pace High Yield vs. Applied Finance Core
Performance |
| Timeline |
| Pace High Yield |
| Applied Finance Core |
Pace High and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Applied Finance
The main advantage of trading using opposite Pace High and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Pace High vs. SCOR PK | Pace High vs. Morningstar Unconstrained Allocation | Pace High vs. Via Renewables | Pace High vs. Bondbloxx ETF Trust |
| Applied Finance vs. Pace High Yield | Applied Finance vs. Doubleline Yield Opportunities | Applied Finance vs. Dreyfusstandish Global Fixed | Applied Finance vs. Dws Government Money |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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