Correlation Between Pax High and Gateway Equity
Can any of the company-specific risk be diversified away by investing in both Pax High and Gateway Equity 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 High and Gateway Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax High Yield and Gateway Equity Call, you can compare the effects of market volatilities on Pax High and Gateway Equity 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 High with a short position of Gateway Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax High and Gateway Equity.
Diversification Opportunities for Pax High and Gateway Equity
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pax and Gateway is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pax High Yield and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call and Pax High 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 High Yield are associated (or correlated) with Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Pax High i.e., Pax High and Gateway Equity go up and down completely randomly.
Pair Corralation between Pax High and Gateway Equity
Assuming the 90 days horizon Pax High is expected to generate 1.86 times less return on investment than Gateway Equity. But when comparing it to its historical volatility, Pax High Yield is 3.19 times less risky than Gateway Equity. It trades about 0.21 of its potential returns per unit of risk. Gateway Equity Call is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,979 in Gateway Equity Call on October 20, 2024 and sell it today you would earn a total of 36.00 from holding Gateway Equity Call or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax High Yield vs. Gateway Equity Call
Performance |
| Timeline |
| Pax High Yield |
| Gateway Equity Call |
Pax High and Gateway Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax High and Gateway Equity
The main advantage of trading using opposite Pax High and Gateway Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax High position performs unexpectedly, Gateway Equity 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 Gateway Equity will offset losses from the drop in Gateway Equity's long position.| Pax High vs. Technology Ultrasector Profund | Pax High vs. Global Technology Portfolio | Pax High vs. Science Technology Fund | Pax High vs. Columbia Global Technology |
| Gateway Equity vs. Blackstone Secured Lending | Gateway Equity vs. Transamerica Financial Life | Gateway Equity vs. Gabelli Global Financial | Gateway Equity vs. Icon Financial Fund |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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