Correlation Between Pacific Funds and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Pacific Funds and Absolute Convertible 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 Pacific Funds and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Portfolio and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Pacific Funds and Absolute Convertible 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 Pacific Funds with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Absolute Convertible.
Diversification Opportunities for Pacific Funds and Absolute Convertible
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pacific and Absolute is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Portfolio and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Pacific Funds 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 Pacific Funds Portfolio are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Pacific Funds i.e., Pacific Funds and Absolute Convertible go up and down completely randomly.
Pair Corralation between Pacific Funds and Absolute Convertible
Assuming the 90 days horizon Pacific Funds Portfolio is expected to generate 12.34 times more return on investment than Absolute Convertible. However, Pacific Funds is 12.34 times more volatile than Absolute Convertible Arbitrage. It trades about 0.09 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.44 per unit of risk. If you would invest 1,050 in Pacific Funds Portfolio on September 2, 2024 and sell it today you would earn a total of 279.00 from holding Pacific Funds Portfolio or generate 26.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Funds Portfolio vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Pacific Funds Portfolio |
| Absolute Convertible |
Pacific Funds and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Funds and Absolute Convertible
The main advantage of trading using opposite Pacific Funds and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Pacific Funds vs. Pacific Funds Floating | Pacific Funds vs. Pacific Funds High | Pacific Funds vs. Pacific Funds Short | Pacific Funds vs. Pacific Funds Short |
| Absolute Convertible vs. Angel Oak Multi Strategy | Absolute Convertible vs. Transamerica Emerging Markets | Absolute Convertible vs. Black Oak Emerging | Absolute Convertible vs. Barings Emerging Markets |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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