Correlation Between Pace High and Northern Funds
Can any of the company-specific risk be diversified away by investing in both Pace High and Northern Funds 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 Northern Funds 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 Northern Funds , you can compare the effects of market volatilities on Pace High and Northern Funds 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 Northern Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Northern Funds.
Diversification Opportunities for Pace High and Northern Funds
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pace and Northern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Northern Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Funds 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 Northern Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Funds has no effect on the direction of Pace High i.e., Pace High and Northern Funds go up and down completely randomly.
Pair Corralation between Pace High and Northern Funds
Assuming the 90 days horizon Pace High Yield is expected to generate 1.0 times more return on investment than Northern Funds. However, Pace High Yield is 1.0 times less risky than Northern Funds. It trades about 0.17 of its potential returns per unit of risk. Northern Funds is currently generating about 0.07 per unit of risk. If you would invest 732.00 in Pace High Yield on September 20, 2024 and sell it today you would earn a total of 161.00 from holding Pace High Yield or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Pace High Yield vs. Northern Funds
Performance |
| Timeline |
| Pace High Yield |
| Northern Funds |
Pace High and Northern Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Northern Funds
The main advantage of trading using opposite Pace High and Northern Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Northern Funds 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 Northern Funds will offset losses from the drop in Northern Funds' long position.| Pace High vs. Gabelli Convertible And | Pace High vs. Putnam Convertible Incm Gwth | Pace High vs. Fidelity Sai Convertible | Pace High vs. Lord Abbett Convertible |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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