Correlation Between Pace High and Salient Select
Can any of the company-specific risk be diversified away by investing in both Pace High and Salient Select 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 Salient Select 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 Salient Select Income, you can compare the effects of market volatilities on Pace High and Salient Select 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 Salient Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Salient Select.
Diversification Opportunities for Pace High and Salient Select
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Salient is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Salient Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Select Income 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 Salient Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Select Income has no effect on the direction of Pace High i.e., Pace High and Salient Select go up and down completely randomly.
Pair Corralation between Pace High and Salient Select
Assuming the 90 days horizon Pace High is expected to generate 1.27 times less return on investment than Salient Select. But when comparing it to its historical volatility, Pace High Yield is 2.46 times less risky than Salient Select. It trades about 0.16 of its potential returns per unit of risk. Salient Select Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,557 in Salient Select Income on September 3, 2024 and sell it today you would earn a total of 406.00 from holding Salient Select Income or generate 26.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Salient Select Income
Performance |
| Timeline |
| Pace High Yield |
| Salient Select Income |
Pace High and Salient Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Salient Select
The main advantage of trading using opposite Pace High and Salient Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Salient Select 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 Salient Select will offset losses from the drop in Salient Select'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 |
| Salient Select vs. Vanguard Financials Index | Salient Select vs. John Hancock Financial | Salient Select vs. Mesirow Financial Small | Salient Select vs. Financials Ultrasector Profund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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