Correlation Between Pace Municipal and Catalyst/millburn

Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Catalyst/millburn 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 Catalyst/millburn 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 Catalystmillburn Dynamic Commodity, you can compare the effects of market volatilities on Pace Municipal and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Catalyst/millburn.

Diversification Opportunities for Pace Municipal and Catalyst/millburn

0.46

Correlation Coefficient

Pace Municipal  Catalyst/millburn

Very weak diversification

The 3 months correlation between Pace and Catalyst/millburn is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Catalystmillburn Dynamic Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Dyn 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Dyn has no effect on the direction of Pace Municipal i.e., Pace Municipal and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Pace Municipal and Catalyst/millburn

Assuming the 90 days horizon Pace Municipal is expected to generate 8.18 times less return on investment than Catalyst/millburn. But when comparing it to its historical volatility, Pace Municipal Fixed is 2.82 times less risky than Catalyst/millburn. It trades about 0.04 of its potential returns per unit of risk. Catalystmillburn Dynamic Commodity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  893.00  in Catalystmillburn Dynamic Commodity on December 24, 2024 and sell it today you would earn a total of  31.00  from holding Catalystmillburn Dynamic Commodity or generate 3.47% return on investment over 90 days.

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

Pace Municipal Fixed  vs.  Catalystmillburn Dynamic Commo

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.

Catalystmillburn Dyn

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Dynamic Commodity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst/millburn 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 Municipal and Catalyst/millburn

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

The idea behind Pace Municipal Fixed and Catalystmillburn Dynamic Commodity 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.