Correlation Between Rational Inflation and Pax Core

Can any of the company-specific risk be diversified away by investing in both Rational Inflation and Pax Core 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 Rational Inflation and Pax Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rational Inflation Growth and Pax E Bond, you can compare the effects of market volatilities on Rational Inflation and Pax Core 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 Rational Inflation with a short position of Pax Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Inflation and Pax Core.

Diversification Opportunities for Rational Inflation and Pax Core

-0.43

Correlation Coefficient

Rational Inflation  Pax Core

Very good diversification

The 3 months correlation between Rational and Pax is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Rational Inflation Growth and Pax E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax E Bond and Rational Inflation 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 Rational Inflation Growth are associated (or correlated) with Pax Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax E Bond has no effect on the direction of Rational Inflation i.e., Rational Inflation and Pax Core go up and down completely randomly.

Pair Corralation between Rational Inflation and Pax Core

If you would invest  952.00  in Rational Inflation Growth on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Rational Inflation Growth or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Rational Inflation Growth  vs.  Pax E Bond

Rational Inflation Growth

Risk-Adjusted Performance

0 of 100

Solid

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

Pax E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rational Inflation and Pax Core

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

The idea behind Rational Inflation Growth and Pax E Bond 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.