Correlation Between Pioneer Amt-free and Causeway International

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

By analyzing existing cross correlation between Pioneer Amt Free Municipal and Causeway International Small, you can compare the effects of market volatilities on Pioneer Amt-free and Causeway International 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 Pioneer Amt-free with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Amt-free and Causeway International.

Diversification Opportunities for Pioneer Amt-free and Causeway International

0.45

Correlation Coefficient

Pioneer Amt-free  Causeway International

Very weak diversification

The 3 months correlation between PIONEER and Causeway is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Amt Free Municipal and Causeway International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Pioneer Amt-free 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 Pioneer Amt Free Municipal are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Pioneer Amt-free i.e., Pioneer Amt-free and Causeway International go up and down completely randomly.

Pair Corralation between Pioneer Amt-free and Causeway International

Assuming the 90 days horizon Pioneer Amt-free is expected to generate 6.25 times less return on investment than Causeway International. But when comparing it to its historical volatility, Pioneer Amt Free Municipal is 2.11 times less risky than Causeway International. It trades about 0.02 of its potential returns per unit of risk. Causeway International Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,113  in Causeway International Small on October 10, 2024 and sell it today you would earn a total of  236.00  from holding Causeway International Small or generate 21.2% return on investment over 90 days.

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

Pioneer Amt Free Municipal  vs.  Causeway International Small

Pioneer Amt Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Causeway International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Causeway International Small 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pioneer Amt-free and Causeway International

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

The idea behind Pioneer Amt Free Municipal and Causeway International Small 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.