Correlation Between Growth Strategy and Pace International
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Pace International 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 Growth Strategy and Pace International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and Pace International Emerging, you can compare the effects of market volatilities on Growth Strategy and Pace International 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 Growth Strategy with a short position of Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Pace International.
Diversification Opportunities for Growth Strategy and Pace International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GROWTH and Pace is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International and Growth Strategy 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 Growth Strategy Fund are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Growth Strategy i.e., Growth Strategy and Pace International go up and down completely randomly.
Pair Corralation between Growth Strategy and Pace International
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.7 times more return on investment than Pace International. However, Growth Strategy Fund is 1.44 times less risky than Pace International. It trades about 0.13 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.05 per unit of risk. If you would invest 1,109 in Growth Strategy Fund on September 2, 2024 and sell it today you would earn a total of 235.00 from holding Growth Strategy Fund or generate 21.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Pace International Emerging
Performance |
| Timeline |
| Growth Strategy |
| Pace International |
Growth Strategy and Pace International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Pace International
The main advantage of trading using opposite Growth Strategy and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Pace International 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 Pace International will offset losses from the drop in Pace International's long position.| Growth Strategy vs. International Developed Markets | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate |
| Pace International vs. Balanced Fund Investor | Pace International vs. Vanguard Small Cap Growth | Pace International vs. Auer Growth Fund | Pace International vs. Rbb Fund |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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