Correlation Between Pace High and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Pace High and Emerging Markets 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 Emerging Markets 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 Emerging Markets Fund, you can compare the effects of market volatilities on Pace High and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Emerging Markets.
Diversification Opportunities for Pace High and Emerging Markets
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Emerging is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Pace High i.e., Pace High and Emerging Markets go up and down completely randomly.
Pair Corralation between Pace High and Emerging Markets
Assuming the 90 days horizon Pace High Yield is expected to generate 0.12 times more return on investment than Emerging Markets. However, Pace High Yield is 8.22 times less risky than Emerging Markets. It trades about 0.56 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.02 per unit of risk. If you would invest 892.00 in Pace High Yield on December 4, 2024 and sell it today you would earn a total of 10.00 from holding Pace High Yield or generate 1.12% 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. Emerging Markets Fund
Performance |
| Timeline |
| Pace High Yield |
| Emerging Markets |
Pace High and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Emerging Markets
The main advantage of trading using opposite Pace High and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Pace High vs. Dreyfus High Yield | Pace High vs. Blackrock High Yield | Pace High vs. Federated High Yield | Pace High vs. Franklin High Yield |
| Emerging Markets vs. Eagle Mlp Strategy | Emerging Markets vs. Dodge Cox Emerging | Emerging Markets vs. Siit Emerging Markets | Emerging Markets vs. Commodities Strategy Fund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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