Correlation Between Small Company and Pioneer High

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

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

Diversification Opportunities for Small Company and Pioneer High

-0.24

Correlation Coefficient

Small Company  Pioneer High

Very good diversification

The 3 months correlation between Small and Pioneer is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Company 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 Small Pany Growth 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 Small Company i.e., Small Company and Pioneer High go up and down completely randomly.

Pair Corralation between Small Company and Pioneer High

Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Pioneer High. In addition to that, Small Company is 11.25 times more volatile than Pioneer High Yield. It trades about -0.08 of its total potential returns per unit of risk. Pioneer High Yield is currently generating about 0.17 per unit of volatility. If you would invest  859.00  in Pioneer High Yield on December 21, 2024 and sell it today you would earn a total of  17.00  from holding Pioneer High Yield or generate 1.98% return on investment over 90 days.

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

Small Pany Growth  vs.  Pioneer High Yield

Small Pany Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pioneer High Yield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer High Yield are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Small Company and Pioneer High

The main advantage of trading using opposite Small Company and Pioneer High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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 Small Pany Growth 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.