Correlation Between Pax Large and Pax High
Can any of the company-specific risk be diversified away by investing in both Pax Large and Pax High 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 High 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 High Yield, you can compare the effects of market volatilities on Pax Large and Pax High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Large and Pax High.
Diversification Opportunities for Pax Large and Pax High
Very weak diversification
The 3 months correlation between Pax and Pax is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pax Large Cap and Pax High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax High Yield has no effect on the direction of Pax Large i.e., Pax Large and Pax High go up and down completely randomly.
Pair Corralation between Pax Large and Pax High
Assuming the 90 days horizon Pax Large Cap is expected to generate 2.76 times more return on investment than Pax High. However, Pax Large is 2.76 times more volatile than Pax High Yield. It trades about 0.08 of its potential returns per unit of risk. Pax High Yield is currently generating about 0.1 per unit of risk. If you would invest 1,132 in Pax Large Cap on August 30, 2024 and sell it today you would earn a total of 420.00 from holding Pax Large Cap or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Large Cap vs. Pax High Yield
Performance |
| Timeline |
| Pax Large Cap |
| Pax High Yield |
Pax Large and Pax High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Large and Pax High
The main advantage of trading using opposite Pax Large and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Large position performs unexpectedly, Pax High 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 High will offset losses from the drop in Pax High's long position.| Pax Large vs. Pgim Conservative Retirement | Pax Large vs. Fidelity Managed Retirement | Pax Large vs. American Funds Retirement | Pax Large vs. Saat Moderate Strategy |
| 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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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