Correlation Between PriceSmart and Pan Pacific
Can any of the company-specific risk be diversified away by investing in both PriceSmart and Pan Pacific 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 PriceSmart and Pan Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PriceSmart and Pan Pacific International, you can compare the effects of market volatilities on PriceSmart and Pan Pacific 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 PriceSmart with a short position of Pan Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of PriceSmart and Pan Pacific.
Diversification Opportunities for PriceSmart and Pan Pacific
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PriceSmart and Pan is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PriceSmart and Pan Pacific International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Pacific International and PriceSmart 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 PriceSmart are associated (or correlated) with Pan Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Pacific International has no effect on the direction of PriceSmart i.e., PriceSmart and Pan Pacific go up and down completely randomly.
Pair Corralation between PriceSmart and Pan Pacific
Given the investment horizon of 90 days PriceSmart is expected to under-perform the Pan Pacific. But the stock apears to be less risky and, when comparing its historical volatility, PriceSmart is 1.03 times less risky than Pan Pacific. The stock trades about -0.09 of its potential returns per unit of risk. The Pan Pacific International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,636 in Pan Pacific International on October 24, 2024 and sell it today you would earn a total of 32.00 from holding Pan Pacific International or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
PriceSmart vs. Pan Pacific International
Performance |
| Timeline |
| PriceSmart |
| Pan Pacific International |
PriceSmart and Pan Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PriceSmart and Pan Pacific
The main advantage of trading using opposite PriceSmart and Pan Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PriceSmart position performs unexpectedly, Pan Pacific 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 Pan Pacific will offset losses from the drop in Pan Pacific's long position.| PriceSmart vs. Wal Mart de | PriceSmart vs. Pan Pacific International | PriceSmart vs. Dollarama | PriceSmart vs. Dollar General |
| Pan Pacific vs. Wal Mart de | Pan Pacific vs. Dollarama | Pan Pacific vs. PriceSmart | Pan Pacific vs. Dollar General |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |