Correlation Between Domini Impact and Parnassus Fixed

Can any of the company-specific risk be diversified away by investing in both Domini Impact and Parnassus Fixed 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 Domini Impact and Parnassus Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Domini Impact Equity and Parnassus Fixed Income, you can compare the effects of market volatilities on Domini Impact and Parnassus Fixed 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 Domini Impact with a short position of Parnassus Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domini Impact and Parnassus Fixed.

Diversification Opportunities for Domini Impact and Parnassus Fixed

-0.47

Correlation Coefficient

Domini Impact  Parnassus Fixed

Very good diversification

The 3 months correlation between Domini and Parnassus is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Domini Impact Equity and Parnassus Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parnassus Fixed Income and Domini Impact 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 Domini Impact Equity are associated (or correlated) with Parnassus Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parnassus Fixed Income has no effect on the direction of Domini Impact i.e., Domini Impact and Parnassus Fixed go up and down completely randomly.

Pair Corralation between Domini Impact and Parnassus Fixed

Assuming the 90 days horizon Domini Impact Equity is expected to generate 2.6 times more return on investment than Parnassus Fixed. However, Domini Impact is 2.6 times more volatile than Parnassus Fixed Income. It trades about 0.17 of its potential returns per unit of risk. Parnassus Fixed Income is currently generating about -0.15 per unit of risk. If you would invest  3,780  in Domini Impact Equity on September 17, 2024 and sell it today you would earn a total of  293.00  from holding Domini Impact Equity or generate 7.75% return on investment over 90 days.

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

Domini Impact Equity  vs.  Parnassus Fixed Income

Domini Impact Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Domini Impact Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Domini Impact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Parnassus Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Domini Impact and Parnassus Fixed

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

The idea behind Domini Impact Equity and Parnassus Fixed Income 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.