Correlation Between Pace Municipal and Clarkston Partners

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

By analyzing existing cross correlation between Pace Municipal Fixed and Clarkston Partners Fund, you can compare the effects of market volatilities on Pace Municipal and Clarkston Partners 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 Municipal with a short position of Clarkston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Clarkston Partners.

Diversification Opportunities for Pace Municipal and Clarkston Partners

-0.36

Correlation Coefficient

Pace Municipal  Clarkston Partners

Very good diversification

The 3 months correlation between Pace and Clarkston is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Clarkston Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Partners and Pace Municipal 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 Municipal Fixed are associated (or correlated) with Clarkston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Partners has no effect on the direction of Pace Municipal i.e., Pace Municipal and Clarkston Partners go up and down completely randomly.

Pair Corralation between Pace Municipal and Clarkston Partners

Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.2 times more return on investment than Clarkston Partners. However, Pace Municipal Fixed is 4.96 times less risky than Clarkston Partners. It trades about 0.05 of its potential returns per unit of risk. Clarkston Partners Fund is currently generating about -0.12 per unit of risk. If you would invest  1,204  in Pace Municipal Fixed on December 21, 2024 and sell it today you would earn a total of  6.00  from holding Pace Municipal Fixed or generate 0.5% return on investment over 90 days.

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

Pace Municipal Fixed  vs.  Clarkston Partners Fund

Pace Municipal Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Municipal Fixed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pace Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clarkston Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarkston Partners Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Municipal and Clarkston Partners

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

The idea behind Pace Municipal Fixed and Clarkston Partners 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.