Correlation Between Pace High and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Pace High and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Pace High and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Floating Rate.
Diversification Opportunities for Pace High and Floating Rate
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Floating is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Pace High i.e., Pace High and Floating Rate go up and down completely randomly.
Pair Corralation between Pace High and Floating Rate
Assuming the 90 days horizon Pace High Yield is expected to generate 1.03 times more return on investment than Floating Rate. However, Pace High is 1.03 times more volatile than Floating Rate Fund. It trades about 0.25 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.22 per unit of risk. If you would invest 820.00 in Pace High Yield on September 14, 2024 and sell it today you would earn a total of 84.00 from holding Pace High Yield or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Floating Rate Fund
Performance |
| Timeline |
| Pace High Yield |
| Floating Rate |
Pace High and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Floating Rate
The main advantage of trading using opposite Pace High and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Pace High vs. Pace Smallmedium Value | Pace High vs. Pace International Equity | Pace High vs. Pace International Equity | Pace High vs. Ubs Allocation Fund |
| Floating Rate vs. Mid Cap 15x Strategy | Floating Rate vs. Transamerica Emerging Markets | Floating Rate vs. Origin Emerging Markets | Floating Rate vs. Shelton Emerging Markets |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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