Correlation Between Pace High and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Pace High and Sound Shore 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 Sound Shore 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 Sound Shore Fund, you can compare the effects of market volatilities on Pace High and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Sound Shore.
Diversification Opportunities for Pace High and Sound Shore
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Sound is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore 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 Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Pace High i.e., Pace High and Sound Shore go up and down completely randomly.
Pair Corralation between Pace High and Sound Shore
Assuming the 90 days horizon Pace High is expected to generate 6.67 times less return on investment than Sound Shore. But when comparing it to its historical volatility, Pace High Yield is 7.15 times less risky than Sound Shore. It trades about 0.46 of its potential returns per unit of risk. Sound Shore Fund is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 4,706 in Sound Shore Fund on September 2, 2024 and sell it today you would earn a total of 324.00 from holding Sound Shore Fund or generate 6.88% 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. Sound Shore Fund
Performance |
| Timeline |
| Pace High Yield |
| Sound Shore Fund |
Pace High and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Sound Shore
The main advantage of trading using opposite Pace High and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore's long position.| Pace High vs. Deutsche Real Estate | Pace High vs. Simt Real Estate | Pace High vs. Virtus Real Estate | Pace High vs. Forum Real Estate |
| Sound Shore vs. Pnc Emerging Markets | Sound Shore vs. Siit Emerging Markets | Sound Shore vs. Origin Emerging Markets | Sound Shore vs. Eagle Mlp Strategy |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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