Correlation Between Pax High and Pax Global
Can any of the company-specific risk be diversified away by investing in both Pax High and Pax Global 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 Pax Global 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 Pax Global Environmental, you can compare the effects of market volatilities on Pax High and Pax Global 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 Pax Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax High and Pax Global.
Diversification Opportunities for Pax High and Pax Global
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pax and Pax is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pax High Yield and Pax Global Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Global Environmental 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 Pax Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Global Environmental has no effect on the direction of Pax High i.e., Pax High and Pax Global go up and down completely randomly.
Pair Corralation between Pax High and Pax Global
Assuming the 90 days horizon Pax High is expected to generate 2.1 times less return on investment than Pax Global. But when comparing it to its historical volatility, Pax High Yield is 4.31 times less risky than Pax Global. It trades about 0.13 of its potential returns per unit of risk. Pax Global Environmental is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,229 in Pax Global Environmental on August 29, 2024 and sell it today you would earn a total of 248.00 from holding Pax Global Environmental or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Pax High Yield vs. Pax Global Environmental
Performance |
| Timeline |
| Pax High Yield |
| Pax Global Environmental |
Pax High and Pax Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax High and Pax Global
The main advantage of trading using opposite Pax High and Pax Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax High position performs unexpectedly, Pax Global 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 Global will offset losses from the drop in Pax Global's long position.| Pax High vs. Hartford Moderate Allocation | Pax High vs. Qs Moderate Growth | Pax High vs. Pro Blend Moderate Term | Pax High vs. Dimensional Retirement Income |
| Pax Global vs. Ab Small Cap | Pax Global vs. Artisan Small Cap | Pax Global vs. Vanguard Strategic Small Cap | Pax Global vs. Ab Small Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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