Correlation Between Pace High and High Yield
Can any of the company-specific risk be diversified away by investing in both Pace High and High Yield 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 High Yield 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 High Yield Fund, you can compare the effects of market volatilities on Pace High and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and High Yield.
Diversification Opportunities for Pace High and High Yield
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and High is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Pace High i.e., Pace High and High Yield go up and down completely randomly.
Pair Corralation between Pace High and High Yield
Assuming the 90 days horizon Pace High Yield is expected to generate 0.74 times more return on investment than High Yield. However, Pace High Yield is 1.35 times less risky than High Yield. It trades about 0.24 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.16 per unit of risk. If you would invest 772.00 in Pace High Yield on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Pace High Yield or generate 16.84% 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. High Yield Fund
Performance |
| Timeline |
| Pace High Yield |
| High Yield Fund |
Pace High and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and High Yield
The main advantage of trading using opposite Pace High and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Pace High vs. SCOR PK | Pace High vs. Morningstar Unconstrained Allocation | Pace High vs. Via Renewables | Pace High vs. Bondbloxx ETF Trust |
| High Yield vs. Franklin High Yield | High Yield vs. Pace High Yield | High Yield vs. Morningstar Defensive Bond | High Yield vs. Western Asset Municipal |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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