Correlation Between Pax Ellevate and TCW ETF
Can any of the company-specific risk be diversified away by investing in both Pax Ellevate and TCW ETF 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 Ellevate and TCW ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Ellevate Global and TCW ETF Trust, you can compare the effects of market volatilities on Pax Ellevate and TCW ETF 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 Ellevate with a short position of TCW ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Ellevate and TCW ETF.
Diversification Opportunities for Pax Ellevate and TCW ETF
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pax and TCW is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pax Ellevate Global and TCW ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCW ETF Trust and Pax Ellevate 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 Ellevate Global are associated (or correlated) with TCW ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCW ETF Trust has no effect on the direction of Pax Ellevate i.e., Pax Ellevate and TCW ETF go up and down completely randomly.
Pair Corralation between Pax Ellevate and TCW ETF
Assuming the 90 days horizon Pax Ellevate is expected to generate 1.48 times less return on investment than TCW ETF. But when comparing it to its historical volatility, Pax Ellevate Global is 1.13 times less risky than TCW ETF. It trades about 0.1 of its potential returns per unit of risk. TCW ETF Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,078 in TCW ETF Trust on August 28, 2024 and sell it today you would earn a total of 944.00 from holding TCW ETF Trust or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Ellevate Global vs. TCW ETF Trust
Performance |
| Timeline |
| Pax Ellevate Global |
| TCW ETF Trust |
Pax Ellevate and TCW ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Ellevate and TCW ETF
The main advantage of trading using opposite Pax Ellevate and TCW ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Ellevate position performs unexpectedly, TCW ETF 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 TCW ETF will offset losses from the drop in TCW ETF's long position.| Pax Ellevate vs. Pax Global Environmental | Pax Ellevate vs. Pax Small Cap | Pax Ellevate vs. Pax Esg Beta | Pax Ellevate vs. Pax Balanced Fund |
| TCW ETF vs. TCW ETF Trust | TCW ETF vs. SPDR SP 500 | TCW ETF vs. Xtrackers SP 500 | TCW ETF vs. BlackRock Carbon Transition |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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