Correlation Between Pace Municipal and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial Small, you can compare the effects of market volatilities on Pace Municipal and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Mesirow Financial.
Diversification Opportunities for Pace Municipal and Mesirow Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PACE and Mesirow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Pace Municipal i.e., Pace Municipal and Mesirow Financial go up and down completely randomly.
Pair Corralation between Pace Municipal and Mesirow Financial
Assuming the 90 days horizon Pace Municipal is expected to generate 4.05 times less return on investment than Mesirow Financial. But when comparing it to its historical volatility, Pace Municipal Fixed is 6.55 times less risky than Mesirow Financial. It trades about 0.07 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,155 in Mesirow Financial Small on August 26, 2024 and sell it today you would earn a total of 274.00 from holding Mesirow Financial Small or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Mesirow Financial Small
Performance |
| Timeline |
| Pace Municipal Fixed |
| Mesirow Financial Small |
Pace Municipal and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Mesirow Financial
The main advantage of trading using opposite Pace Municipal and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Pace Municipal vs. Pace International Equity | Pace Municipal vs. Ubs Allocation Fund | Pace Municipal vs. Ubs Allocation Fund | Pace Municipal vs. Pace Mortgage Backed Securities |
| Mesirow Financial vs. Pace Municipal Fixed | Mesirow Financial vs. T Rowe Price | Mesirow Financial vs. T Rowe Price | Mesirow Financial vs. Morningstar Defensive Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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