Correlation Between Absolute Capital and Pioneer High

Can any of the company-specific risk be diversified away by investing in both Absolute Capital and Pioneer 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 Absolute Capital and Pioneer High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absolute Capital Asset and Pioneer High Yield, you can compare the effects of market volatilities on Absolute Capital and Pioneer 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 Absolute Capital with a short position of Pioneer High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Capital and Pioneer High.

Diversification Opportunities for Absolute Capital and Pioneer High

0.65

Correlation Coefficient

Absolute Capital  Pioneer High

Poor diversification

The 3 months correlation between Absolute and Pioneer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Capital Asset and Pioneer High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Yield and Absolute Capital 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 Absolute Capital Asset are associated (or correlated) with Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Yield has no effect on the direction of Absolute Capital i.e., Absolute Capital and Pioneer High go up and down completely randomly.

Pair Corralation between Absolute Capital and Pioneer High

Assuming the 90 days horizon Absolute Capital Asset is expected to under-perform the Pioneer High. In addition to that, Absolute Capital is 5.55 times more volatile than Pioneer High Yield. It trades about -0.28 of its total potential returns per unit of risk. Pioneer High Yield is currently generating about -0.33 per unit of volatility. If you would invest  906.00  in Pioneer High Yield on October 6, 2024 and sell it today you would lose (11.00) from holding Pioneer High Yield or give up 1.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Absolute Capital Asset  vs.  Pioneer High Yield

Absolute Capital Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolute Capital Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Absolute Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pioneer High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolute Capital and Pioneer High

The main advantage of trading using opposite Absolute Capital and Pioneer High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Capital position performs unexpectedly, Pioneer 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 Pioneer High will offset losses from the drop in Pioneer High's long position.

The idea behind Absolute Capital Asset and Pioneer 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.