Correlation Between Pax High and Pace Smallmedium
Can any of the company-specific risk be diversified away by investing in both Pax High and Pace Smallmedium 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 Pace Smallmedium 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 Pace Smallmedium Growth, you can compare the effects of market volatilities on Pax High and Pace Smallmedium 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 Pace Smallmedium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax High and Pace Smallmedium.
Diversification Opportunities for Pax High and Pace Smallmedium
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pax and Pace is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pax High Yield and Pace Smallmedium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Growth 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 Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Growth has no effect on the direction of Pax High i.e., Pax High and Pace Smallmedium go up and down completely randomly.
Pair Corralation between Pax High and Pace Smallmedium
Assuming the 90 days horizon Pax High is expected to generate 3.78 times less return on investment than Pace Smallmedium. But when comparing it to its historical volatility, Pax High Yield is 9.32 times less risky than Pace Smallmedium. It trades about 0.28 of its potential returns per unit of risk. Pace Smallmedium Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,379 in Pace Smallmedium Growth on September 14, 2024 and sell it today you would earn a total of 33.00 from holding Pace Smallmedium Growth or generate 2.39% 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. Pace Smallmedium Growth
Performance |
| Timeline |
| Pax High Yield |
| Pace Smallmedium Growth |
Pax High and Pace Smallmedium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax High and Pace Smallmedium
The main advantage of trading using opposite Pax High and Pace Smallmedium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax High position performs unexpectedly, Pace Smallmedium 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 Pace Smallmedium will offset losses from the drop in Pace Smallmedium's long position.| Pax High vs. Pax E Bond | Pax High vs. Pax Global Environmental | Pax High vs. Pax Esg Beta | Pax High vs. Pax Global Opportunities |
| Pace Smallmedium vs. Pace High Yield | Pace Smallmedium vs. Pax High Yield | Pace Smallmedium vs. Guggenheim High Yield | Pace Smallmedium vs. Buffalo High Yield |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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