Correlation Between Pace Municipal and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Bny Mellon 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 Municipal and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Bny Mellon Bond, you can compare the effects of market volatilities on Pace Municipal and Bny Mellon 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 Municipal with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Bny Mellon.
Diversification Opportunities for Pace Municipal and Bny Mellon
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PACE and Bny is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Bny Mellon Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Bond and Pace Municipal 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 Municipal Fixed are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Bond has no effect on the direction of Pace Municipal i.e., Pace Municipal and Bny Mellon go up and down completely randomly.
Pair Corralation between Pace Municipal and Bny Mellon
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.73 times more return on investment than Bny Mellon. However, Pace Municipal Fixed is 1.37 times less risky than Bny Mellon. It trades about 0.08 of its potential returns per unit of risk. Bny Mellon Bond is currently generating about -0.09 per unit of risk. If you would invest 1,215 in Pace Municipal Fixed on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Pace Municipal Fixed or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Bny Mellon Bond
Performance |
| Timeline |
| Pace Municipal Fixed |
| Bny Mellon Bond |
Pace Municipal and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Bny Mellon
The main advantage of trading using opposite Pace Municipal and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.| Pace Municipal vs. Scharf Fund Retail | Pace Municipal vs. The Hartford Equity | Pace Municipal vs. Small Cap Equity | Pace Municipal vs. Touchstone International Equity |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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