Correlation Between Buffalo High and Pace Small/medium

Can any of the company-specific risk be diversified away by investing in both Buffalo High and Pace Small/medium 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 Buffalo High and Pace Small/medium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buffalo High Yield and Pace Smallmedium Growth, you can compare the effects of market volatilities on Buffalo High and Pace Small/medium 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 Buffalo High with a short position of Pace Small/medium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo High and Pace Small/medium.

Diversification Opportunities for Buffalo High and Pace Small/medium

-0.48

Correlation Coefficient

Buffalo High  Pace Small/medium

Very good diversification

The 3 months correlation between BUFFALO and Pace is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo High Yield and Pace Smallmedium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Growth and Buffalo High 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 Buffalo High Yield are associated (or correlated) with Pace Small/medium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Growth has no effect on the direction of Buffalo High i.e., Buffalo High and Pace Small/medium go up and down completely randomly.

Pair Corralation between Buffalo High and Pace Small/medium

Assuming the 90 days horizon Buffalo High Yield is expected to generate 0.12 times more return on investment than Pace Small/medium. However, Buffalo High Yield is 8.69 times less risky than Pace Small/medium. It trades about 0.31 of its potential returns per unit of risk. Pace Smallmedium Growth is currently generating about 0.03 per unit of risk. If you would invest  876.00  in Buffalo High Yield on December 4, 2024 and sell it today you would earn a total of  203.00  from holding Buffalo High Yield or generate 23.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Buffalo High Yield  vs.  Pace Smallmedium Growth

Buffalo High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo High Yield are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Buffalo High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pace Smallmedium Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Smallmedium Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Buffalo High and Pace Small/medium

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

The idea behind Buffalo High Yield and Pace Smallmedium Growth 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.

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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.