Correlation Between Pioneer International and Amundi Climate
Can any of the company-specific risk be diversified away by investing in both Pioneer International and Amundi Climate 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 Pioneer International and Amundi Climate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pioneer International Equity and Amundi Climate Transition, you can compare the effects of market volatilities on Pioneer International and Amundi Climate 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 Pioneer International with a short position of Amundi Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer International and Amundi Climate.
Diversification Opportunities for Pioneer International and Amundi Climate
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pioneer and Amundi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer International Equity and Amundi Climate Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Climate Transition and Pioneer International 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 Pioneer International Equity are associated (or correlated) with Amundi Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Climate Transition has no effect on the direction of Pioneer International i.e., Pioneer International and Amundi Climate go up and down completely randomly.
Pair Corralation between Pioneer International and Amundi Climate
Assuming the 90 days horizon Pioneer International Equity is expected to under-perform the Amundi Climate. In addition to that, Pioneer International is 2.24 times more volatile than Amundi Climate Transition. It trades about -0.22 of its total potential returns per unit of risk. Amundi Climate Transition is currently generating about -0.18 per unit of volatility. If you would invest 1,005 in Amundi Climate Transition on August 29, 2024 and sell it today you would lose (27.00) from holding Amundi Climate Transition or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pioneer International Equity vs. Amundi Climate Transition
Performance |
| Timeline |
| Pioneer International |
| Amundi Climate Transition |
Pioneer International and Amundi Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pioneer International and Amundi Climate
The main advantage of trading using opposite Pioneer International and Amundi Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer International position performs unexpectedly, Amundi Climate 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 Amundi Climate will offset losses from the drop in Amundi Climate's long position.The idea behind Pioneer International Equity and Amundi Climate Transition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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