Correlation Between Pax Esg and Domini Impact
Can any of the company-specific risk be diversified away by investing in both Pax Esg and Domini Impact 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 Esg and Domini Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Esg Beta and Domini Impact Equity, you can compare the effects of market volatilities on Pax Esg and Domini Impact 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 Esg with a short position of Domini Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Esg and Domini Impact.
Diversification Opportunities for Pax Esg and Domini Impact
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pax and Domini is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pax Esg Beta and Domini Impact Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini Impact Equity and Pax Esg 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 Esg Beta are associated (or correlated) with Domini Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini Impact Equity has no effect on the direction of Pax Esg i.e., Pax Esg and Domini Impact go up and down completely randomly.
Pair Corralation between Pax Esg and Domini Impact
Assuming the 90 days horizon Pax Esg is expected to generate 1.18 times less return on investment than Domini Impact. But when comparing it to its historical volatility, Pax Esg Beta is 1.03 times less risky than Domini Impact. It trades about 0.1 of its potential returns per unit of risk. Domini Impact Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,573 in Domini Impact Equity on August 28, 2024 and sell it today you would earn a total of 1,402 from holding Domini Impact Equity or generate 54.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Esg Beta vs. Domini Impact Equity
Performance |
| Timeline |
| Pax Esg Beta |
| Domini Impact Equity |
Pax Esg and Domini Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Esg and Domini Impact
The main advantage of trading using opposite Pax Esg and Domini Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Esg position performs unexpectedly, Domini Impact 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 Domini Impact will offset losses from the drop in Domini Impact's long position.| Pax Esg vs. Pax Balanced Fund | Pax Esg vs. Pax High Yield | Pax Esg vs. Green Century Equity | Pax Esg vs. Domini Impact Equity |
| Domini Impact vs. Domini Impact Bond | Domini Impact vs. Pax Balanced Fund | Domini Impact vs. Ariel Appreciation Fund | Domini Impact vs. Calvert Equity Portfolio |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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