Correlation Between Moderately Aggressive and Pax High
Can any of the company-specific risk be diversified away by investing in both Moderately Aggressive 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 Moderately Aggressive and Pax High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moderately Aggressive Balanced and Pax High Yield, you can compare the effects of market volatilities on Moderately Aggressive 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 Moderately Aggressive with a short position of Pax High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderately Aggressive and Pax High.
Diversification Opportunities for Moderately Aggressive and Pax High
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Moderately and Pax is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced 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 Moderately Aggressive 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 Moderately Aggressive Balanced 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 Moderately Aggressive i.e., Moderately Aggressive and Pax High go up and down completely randomly.
Pair Corralation between Moderately Aggressive and Pax High
Assuming the 90 days horizon Moderately Aggressive Balanced is expected to generate 2.64 times more return on investment than Pax High. However, Moderately Aggressive is 2.64 times more volatile than Pax High Yield. It trades about 0.21 of its potential returns per unit of risk. Pax High Yield is currently generating about 0.3 per unit of risk. If you would invest 1,182 in Moderately Aggressive Balanced on October 24, 2024 and sell it today you would earn a total of 28.00 from holding Moderately Aggressive Balanced or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moderately Aggressive Balanced vs. Pax High Yield
Performance |
| Timeline |
| Moderately Aggressive |
| Pax High Yield |
Moderately Aggressive and Pax High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moderately Aggressive and Pax High
The main advantage of trading using opposite Moderately Aggressive and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderately Aggressive 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.The idea behind Moderately Aggressive Balanced and Pax High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Pax High vs. Pax E Bond | Pax High vs. Pax Global Environmental | Pax High vs. Pax Esg Beta | Pax High vs. Pax Global Opportunities |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stocks Directory Find actively traded stocks across global markets |