Correlation Between Pear Tree and Pax Balanced
Can any of the company-specific risk be diversified away by investing in both Pear Tree 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 Pear Tree and Pax Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Pax Balanced Fund, you can compare the effects of market volatilities on Pear Tree 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 Pear Tree with a short position of Pax Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Pax Balanced.
Diversification Opportunities for Pear Tree and Pax Balanced
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pear and Pax is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Pax Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Balanced and Pear Tree 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 Pear Tree Polaris 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 Pear Tree i.e., Pear Tree and Pax Balanced go up and down completely randomly.
Pair Corralation between Pear Tree and Pax Balanced
Assuming the 90 days horizon Pear Tree Polaris is expected to under-perform the Pax Balanced. In addition to that, Pear Tree is 1.59 times more volatile than Pax Balanced Fund. It trades about -0.07 of its total potential returns per unit of risk. Pax Balanced Fund is currently generating about 0.06 per unit of volatility. If you would invest 2,689 in Pax Balanced Fund on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Pax Balanced Fund or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Pax Balanced Fund
Performance |
| Timeline |
| Pear Tree Polaris |
| Pax Balanced |
Pear Tree and Pax Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Pax Balanced
The main advantage of trading using opposite Pear Tree and Pax Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree 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.| Pear Tree vs. Wasatch E Growth | Pear Tree vs. Tcw E Fixed | Pear Tree vs. Tcw Relative Value | Pear Tree vs. Amg Managers Loomis |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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