Correlation Between Pax Large and Pax Balanced
Can any of the company-specific risk be diversified away by investing in both Pax Large and Pax Balanced 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 Large and Pax Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Large Cap and Pax Balanced Fund, you can compare the effects of market volatilities on Pax Large and Pax Balanced 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 Large with a short position of Pax Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Large and Pax Balanced.
Diversification Opportunities for Pax Large and Pax Balanced
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pax and Pax is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pax Large Cap and Pax Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Balanced and Pax Large 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 Large Cap are associated (or correlated) with Pax Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Balanced has no effect on the direction of Pax Large i.e., Pax Large and Pax Balanced go up and down completely randomly.
Pair Corralation between Pax Large and Pax Balanced
Assuming the 90 days horizon Pax Large Cap is expected to generate 1.62 times more return on investment than Pax Balanced. However, Pax Large is 1.62 times more volatile than Pax Balanced Fund. It trades about 0.09 of its potential returns per unit of risk. Pax Balanced Fund is currently generating about 0.1 per unit of risk. If you would invest 1,426 in Pax Large Cap on September 1, 2024 and sell it today you would earn a total of 128.00 from holding Pax Large Cap or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Large Cap vs. Pax Balanced Fund
Performance |
| Timeline |
| Pax Large Cap |
| Pax Balanced |
Pax Large and Pax Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Large and Pax Balanced
The main advantage of trading using opposite Pax Large and Pax Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Large position performs unexpectedly, Pax Balanced 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 Balanced will offset losses from the drop in Pax Balanced's long position.| Pax Large vs. Dunham High Yield | Pax Large vs. Virtus High Yield | Pax Large vs. Gmo High Yield | Pax Large vs. Alpine High Yield |
| Pax Balanced vs. Calvert Conservative Allocation | Pax Balanced vs. Jhancock Diversified Macro | Pax Balanced vs. Huber Capital Diversified | Pax Balanced vs. Pimco Diversified Income |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |