Correlation Between Pax Balanced and Teton Westwood

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

By analyzing existing cross correlation between Pax Balanced Fund and Teton Westwood Small, you can compare the effects of market volatilities on Pax Balanced and Teton Westwood 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 Pax Balanced with a short position of Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Balanced and Teton Westwood.

Diversification Opportunities for Pax Balanced and Teton Westwood

0.14

Correlation Coefficient

Pax Balanced  Teton Westwood

Average diversification

The 3 months correlation between Pax and Teton is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pax Balanced Fund and Teton Westwood Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Small and Pax Balanced 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 Pax Balanced Fund are associated (or correlated) with Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Small has no effect on the direction of Pax Balanced i.e., Pax Balanced and Teton Westwood go up and down completely randomly.

Pair Corralation between Pax Balanced and Teton Westwood

Assuming the 90 days horizon Pax Balanced Fund is expected to generate 0.25 times more return on investment than Teton Westwood. However, Pax Balanced Fund is 4.02 times less risky than Teton Westwood. It trades about 0.02 of its potential returns per unit of risk. Teton Westwood Small is currently generating about -0.02 per unit of risk. If you would invest  2,571  in Pax Balanced Fund on October 7, 2024 and sell it today you would earn a total of  23.00  from holding Pax Balanced Fund or generate 0.89% return on investment over 90 days.

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

Pax Balanced Fund  vs.  Teton Westwood Small

Pax Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teton Westwood Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teton Westwood 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 fundamental 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 Pax Balanced and Teton Westwood

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

The idea behind Pax Balanced Fund and Teton Westwood 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.