Correlation Between Parnassus Endeavor and Paradigm Value

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

By analyzing existing cross correlation between Parnassus Endeavor Fund and Paradigm Value Fund, you can compare the effects of market volatilities on Parnassus Endeavor and Paradigm Value 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 Parnassus Endeavor with a short position of Paradigm Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parnassus Endeavor and Paradigm Value.

Diversification Opportunities for Parnassus Endeavor and Paradigm Value

-0.03

Correlation Coefficient

Parnassus Endeavor  Paradigm Value

Good diversification

The 3 months correlation between Parnassus and Paradigm is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Parnassus Endeavor Fund and Paradigm Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Value and Parnassus Endeavor 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 Parnassus Endeavor Fund are associated (or correlated) with Paradigm Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Value has no effect on the direction of Parnassus Endeavor i.e., Parnassus Endeavor and Paradigm Value go up and down completely randomly.

Pair Corralation between Parnassus Endeavor and Paradigm Value

Assuming the 90 days horizon Parnassus Endeavor Fund is expected to generate 0.55 times more return on investment than Paradigm Value. However, Parnassus Endeavor Fund is 1.82 times less risky than Paradigm Value. It trades about -0.14 of its potential returns per unit of risk. Paradigm Value Fund is currently generating about -0.17 per unit of risk. If you would invest  5,919  in Parnassus Endeavor Fund on November 29, 2024 and sell it today you would lose (515.00) from holding Parnassus Endeavor Fund or give up 8.7% of portfolio value over 90 days.

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

Parnassus Endeavor Fund  vs.  Paradigm Value Fund

Parnassus Endeavor

Risk-Adjusted Performance

Very Weak

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

Paradigm Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paradigm Value Fund 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 March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Parnassus Endeavor and Paradigm Value

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

The idea behind Parnassus Endeavor Fund and Paradigm Value Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.