Correlation Between Pace International and 1290 Doubleline

Can any of the company-specific risk be diversified away by investing in both Pace International and 1290 Doubleline 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 Pace International and 1290 Doubleline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pace International Emerging and 1290 Doubleline Dynamic, you can compare the effects of market volatilities on Pace International and 1290 Doubleline 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 Pace International with a short position of 1290 Doubleline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and 1290 Doubleline.

Diversification Opportunities for Pace International and 1290 Doubleline

0.47

Correlation Coefficient

Pace International  1290 Doubleline

Very weak diversification

The 3 months correlation between Pace and 1290 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and 1290 Doubleline Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Doubleline Dynamic and Pace International 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 Pace International Emerging are associated (or correlated) with 1290 Doubleline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Doubleline Dynamic has no effect on the direction of Pace International i.e., Pace International and 1290 Doubleline go up and down completely randomly.

Pair Corralation between Pace International and 1290 Doubleline

Assuming the 90 days horizon Pace International Emerging is expected to generate 3.49 times more return on investment than 1290 Doubleline. However, Pace International is 3.49 times more volatile than 1290 Doubleline Dynamic. It trades about 0.05 of its potential returns per unit of risk. 1290 Doubleline Dynamic is currently generating about 0.13 per unit of risk. If you would invest  1,303  in Pace International Emerging on December 4, 2024 and sell it today you would earn a total of  10.00  from holding Pace International Emerging or generate 0.77% return on investment over 90 days.

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

Pace International Emerging  vs.  1290 Doubleline Dynamic

Pace International

Risk-Adjusted Performance

Very Weak

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

1290 Doubleline Dynamic

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1290 Doubleline Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, 1290 Doubleline is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pace International and 1290 Doubleline

The main advantage of trading using opposite Pace International and 1290 Doubleline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, 1290 Doubleline 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 1290 Doubleline will offset losses from the drop in 1290 Doubleline's long position.

The idea behind Pace International Emerging and 1290 Doubleline Dynamic 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.