Correlation Between Pace High and Grandeur Peak
Can any of the company-specific risk be diversified away by investing in both Pace High and Grandeur Peak 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 Grandeur Peak 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 Grandeur Peak Global, you can compare the effects of market volatilities on Pace High and Grandeur Peak 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 Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Grandeur Peak.
Diversification Opportunities for Pace High and Grandeur Peak
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Grandeur is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Grandeur Peak Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Global 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 Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Global has no effect on the direction of Pace High i.e., Pace High and Grandeur Peak go up and down completely randomly.
Pair Corralation between Pace High and Grandeur Peak
Assuming the 90 days horizon Pace High is expected to generate 1.35 times less return on investment than Grandeur Peak. But when comparing it to its historical volatility, Pace High Yield is 7.59 times less risky than Grandeur Peak. It trades about 0.43 of its potential returns per unit of risk. Grandeur Peak Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 345.00 in Grandeur Peak Global on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Grandeur Peak Global or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Grandeur Peak Global
Performance |
| Timeline |
| Pace High Yield |
| Grandeur Peak Global |
Pace High and Grandeur Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Grandeur Peak
The main advantage of trading using opposite Pace High and Grandeur Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Grandeur Peak 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 Grandeur Peak will offset losses from the drop in Grandeur Peak's long position.| Pace High vs. Sarofim Equity | Pace High vs. Ultra Short Fixed Income | Pace High vs. Artisan Select Equity | Pace High vs. Cutler Equity |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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