Correlation Between Pax Global and Pax Small
Can any of the company-specific risk be diversified away by investing in both Pax Global and Pax Small 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 Pax Global and Pax Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Global Opportunities and Pax Small Cap, you can compare the effects of market volatilities on Pax Global and Pax Small 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 Pax Global with a short position of Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Global and Pax Small.
Diversification Opportunities for Pax Global and Pax Small
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pax and Pax is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pax Global Opportunities and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap and Pax Global 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 Pax Global Opportunities are associated (or correlated) with Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Pax Global i.e., Pax Global and Pax Small go up and down completely randomly.
Pair Corralation between Pax Global and Pax Small
Assuming the 90 days horizon Pax Global is expected to generate 1.19 times less return on investment than Pax Small. But when comparing it to its historical volatility, Pax Global Opportunities is 1.38 times less risky than Pax Small. It trades about 0.06 of its potential returns per unit of risk. Pax Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,485 in Pax Small Cap on August 26, 2024 and sell it today you would earn a total of 402.00 from holding Pax Small Cap or generate 27.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Global Opportunities vs. Pax Small Cap
Performance |
| Timeline |
| Pax Global Opportunities |
| Pax Small Cap |
Pax Global and Pax Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Global and Pax Small
The main advantage of trading using opposite Pax Global and Pax Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Global position performs unexpectedly, Pax Small 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 Pax Small will offset losses from the drop in Pax Small's long position.| Pax Global vs. Pax E Bond | Pax Global vs. Pax Global Environmental | Pax Global vs. Pax Esg Beta | Pax Global vs. Pax High Yield |
| Pax Small vs. Metropolitan West Porate | Pax Small vs. Nuveen All American Municipal | Pax Small vs. Artisan High Income | Pax Small vs. Transamerica Intermediate Muni |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets |