Correlation Between Pace High and International Emerging
Can any of the company-specific risk be diversified away by investing in both Pace High and International Emerging 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 International Emerging 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 International Emerging Markets, you can compare the effects of market volatilities on Pace High and International Emerging 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 International Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and International Emerging.
Diversification Opportunities for Pace High and International Emerging
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and International is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and International Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Emerging 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 International Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Emerging has no effect on the direction of Pace High i.e., Pace High and International Emerging go up and down completely randomly.
Pair Corralation between Pace High and International Emerging
Assuming the 90 days horizon Pace High Yield is expected to generate about the same return on investment as International Emerging Markets. But, Pace High Yield is 3.72 times less risky than International Emerging. It trades about 0.16 of its potential returns per unit of risk. International Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 2,221 in International Emerging Markets on August 25, 2024 and sell it today you would earn a total of 411.00 from holding International Emerging Markets or generate 18.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. International Emerging Markets
Performance |
| Timeline |
| Pace High Yield |
| International Emerging |
Pace High and International Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and International Emerging
The main advantage of trading using opposite Pace High and International Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, International Emerging 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 International Emerging will offset losses from the drop in International Emerging's long position.| Pace High vs. Simt Real Estate | Pace High vs. Deutsche Real Estate | Pace High vs. Real Estate Fund | Pace High vs. Amg Managers Centersquare |
| International Emerging vs. Dunham High Yield | International Emerging vs. Lord Abbett High | International Emerging vs. Pace High Yield | International Emerging vs. Pace High Yield |
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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