Correlation Between Pace High and Ishares Msci

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

By analyzing existing cross correlation between Pace High Yield and Ishares Msci Eafe, you can compare the effects of market volatilities on Pace High and Ishares Msci 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 High with a short position of Ishares Msci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Ishares Msci.

Diversification Opportunities for Pace High and Ishares Msci

0.7

Correlation Coefficient

Pace High  Ishares Msci

Poor diversification

The 3 months correlation between Pace and Ishares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Ishares Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Msci Eafe and Pace High 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 High Yield are associated (or correlated) with Ishares Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Msci Eafe has no effect on the direction of Pace High i.e., Pace High and Ishares Msci go up and down completely randomly.

Pair Corralation between Pace High and Ishares Msci

Assuming the 90 days horizon Pace High Yield is expected to under-perform the Ishares Msci. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace High Yield is 7.57 times less risky than Ishares Msci. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Ishares Msci Eafe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,644  in Ishares Msci Eafe on December 20, 2024 and sell it today you would earn a total of  34.00  from holding Ishares Msci Eafe or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Pace High Yield  vs.  Ishares Msci Eafe

Pace High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pace High Yield are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pace High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Msci Eafe

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Msci Eafe are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Msci showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pace High and Ishares Msci

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

The idea behind Pace High Yield and Ishares Msci Eafe 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.