Correlation Between Pace Large and Queens Road

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

By analyzing existing cross correlation between Pace Large Value and Queens Road Small, you can compare the effects of market volatilities on Pace Large and Queens Road 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 Large with a short position of Queens Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Queens Road.

Diversification Opportunities for Pace Large and Queens Road

0.67

Correlation Coefficient

Pace Large  Queens Road

Poor diversification

The 3 months correlation between Pace and Queens is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Queens Road Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queens Road Small and Pace Large 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 Large Value are associated (or correlated) with Queens Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queens Road Small has no effect on the direction of Pace Large i.e., Pace Large and Queens Road go up and down completely randomly.

Pair Corralation between Pace Large and Queens Road

Assuming the 90 days horizon Pace Large Value is expected to generate 0.73 times more return on investment than Queens Road. However, Pace Large Value is 1.37 times less risky than Queens Road. It trades about -0.09 of its potential returns per unit of risk. Queens Road Small is currently generating about -0.18 per unit of risk. If you would invest  2,104  in Pace Large Value on December 4, 2024 and sell it today you would lose (27.00) from holding Pace Large Value or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Pace Large Value  vs.  Queens Road Small

Pace Large Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Large Value 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.

Queens Road Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Queens Road Small 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.

Pair Trading with Pace Large and Queens Road

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

The idea behind Pace Large Value and Queens Road 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.