Correlation Between Pax Esg and Pax High
Can any of the company-specific risk be diversified away by investing in both Pax Esg 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 Esg 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 Esg Beta and Pax High Yield, you can compare the effects of market volatilities on Pax Esg 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 Esg with a short position of Pax High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Esg and Pax High.
Diversification Opportunities for Pax Esg and Pax High
Very weak diversification
The 3 months correlation between Pax and Pax is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pax Esg Beta 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 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 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 Esg i.e., Pax Esg and Pax High go up and down completely randomly.
Pair Corralation between Pax Esg and Pax High
Assuming the 90 days horizon Pax Esg Beta is expected to under-perform the Pax High. In addition to that, Pax Esg is 3.86 times more volatile than Pax High Yield. It trades about -0.02 of its total potential returns per unit of risk. Pax High Yield is currently generating about 0.16 per unit of volatility. If you would invest 609.00 in Pax High Yield on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Pax High Yield or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Esg Beta vs. Pax High Yield
Performance |
| Timeline |
| Pax Esg Beta |
| Pax High Yield |
Pax Esg and Pax High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Esg and Pax High
The main advantage of trading using opposite Pax Esg and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Esg 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 Esg vs. Vanguard Total Stock | Pax Esg vs. Vanguard 500 Index | Pax Esg vs. Vanguard Total Stock | Pax Esg vs. Vanguard Total Stock |
| Pax High vs. Vanguard High Yield Corporate | Pax High vs. Vanguard High Yield Porate | Pax High vs. Blackrock Hi Yld | Pax High vs. Blackrock High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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