Correlation Between Pace International and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Pace International and Amcap Fund 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 International and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Emerging and Amcap Fund Class, you can compare the effects of market volatilities on Pace International and Amcap Fund 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 International with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Amcap Fund.
Diversification Opportunities for Pace International and Amcap Fund
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Amcap is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and Pace 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 Pace International Emerging are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Pace International i.e., Pace International and Amcap Fund go up and down completely randomly.
Pair Corralation between Pace International and Amcap Fund
Assuming the 90 days horizon Pace International Emerging is expected to under-perform the Amcap Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace International Emerging is 1.24 times less risky than Amcap Fund. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Amcap Fund Class is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,515 in Amcap Fund Class on August 31, 2024 and sell it today you would earn a total of 113.00 from holding Amcap Fund Class or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Amcap Fund Class
Performance |
| Timeline |
| Pace International |
| Amcap Fund Class |
Pace International and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Amcap Fund
The main advantage of trading using opposite Pace International and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| Pace International vs. Strategic Allocation Aggressive | Pace International vs. T Rowe Price | Pace International vs. Federated Kaufmann Large | Pace International vs. Alternative Asset Allocation |
| Amcap Fund vs. Commonwealth Real Estate | Amcap Fund vs. Columbia Real Estate | Amcap Fund vs. Forum Real Estate | Amcap Fund vs. Amg Managers Centersquare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |