Correlation Between Seafarer Overseas and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Seafarer Overseas and Pear Tree 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 Seafarer Overseas and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seafarer Overseas Growth and Pear Tree Polaris, you can compare the effects of market volatilities on Seafarer Overseas and Pear Tree 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 Seafarer Overseas with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seafarer Overseas and Pear Tree.
Diversification Opportunities for Seafarer Overseas and Pear Tree
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seafarer and Pear is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Seafarer Overseas Growth and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Seafarer Overseas 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 Seafarer Overseas Growth are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Seafarer Overseas i.e., Seafarer Overseas and Pear Tree go up and down completely randomly.
Pair Corralation between Seafarer Overseas and Pear Tree
Assuming the 90 days horizon Seafarer Overseas is expected to generate 1.89 times less return on investment than Pear Tree. But when comparing it to its historical volatility, Seafarer Overseas Growth is 1.18 times less risky than Pear Tree. It trades about 0.03 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 914.00 in Pear Tree Polaris on August 27, 2024 and sell it today you would earn a total of 190.00 from holding Pear Tree Polaris or generate 20.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seafarer Overseas Growth vs. Pear Tree Polaris
Performance |
| Timeline |
| Seafarer Overseas Growth |
| Pear Tree Polaris |
Seafarer Overseas and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seafarer Overseas and Pear Tree
The main advantage of trading using opposite Seafarer Overseas and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seafarer Overseas position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Seafarer Overseas vs. Seafarer Overseas Value | Seafarer Overseas vs. Seafarer Overseas Growth | Seafarer Overseas vs. Seafarer Overseas Value | Seafarer Overseas vs. Fidelity China Region |
| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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