Correlation Between Pacific Funds and Collegeadvantage

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

By analyzing existing cross correlation between Pacific Funds Small Cap and Collegeadvantage 529 Savings, you can compare the effects of market volatilities on Pacific Funds and Collegeadvantage 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 Pacific Funds with a short position of Collegeadvantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Collegeadvantage.

Diversification Opportunities for Pacific Funds and Collegeadvantage

0.73

Correlation Coefficient

Pacific Funds  Collegeadvantage

Poor diversification

The 3 months correlation between Pacific and Collegeadvantage is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Small Cap and Collegeadvantage 529 Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegeadvantage 529 and Pacific Funds 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 Pacific Funds Small Cap are associated (or correlated) with Collegeadvantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegeadvantage 529 has no effect on the direction of Pacific Funds i.e., Pacific Funds and Collegeadvantage go up and down completely randomly.

Pair Corralation between Pacific Funds and Collegeadvantage

Assuming the 90 days horizon Pacific Funds Small Cap is expected to under-perform the Collegeadvantage. In addition to that, Pacific Funds is 1.36 times more volatile than Collegeadvantage 529 Savings. It trades about -0.12 of its total potential returns per unit of risk. Collegeadvantage 529 Savings is currently generating about 0.05 per unit of volatility. If you would invest  1,714  in Collegeadvantage 529 Savings on September 29, 2024 and sell it today you would earn a total of  324.00  from holding Collegeadvantage 529 Savings or generate 18.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	15.19%
Values	Daily Returns

Pacific Funds Small Cap  vs.  Collegeadvantage 529 Savings

Pacific Funds Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Collegeadvantage 529

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collegeadvantage 529 Savings has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Pacific Funds and Collegeadvantage

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

The idea behind Pacific Funds Small Cap and Collegeadvantage 529 Savings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.