Correlation Between Pace Large and Manning Napier

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

By analyzing existing cross correlation between Pace Large Growth and Manning Napier Core, you can compare the effects of market volatilities on Pace Large and Manning Napier 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 Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Manning Napier.

Diversification Opportunities for Pace Large and Manning Napier

0.59

Correlation Coefficient

Pace Large  Manning Napier

Very weak diversification

The 3 months correlation between Pace and Manning is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth and Manning Napier Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Core 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 Growth are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Core has no effect on the direction of Pace Large i.e., Pace Large and Manning Napier go up and down completely randomly.

Pair Corralation between Pace Large and Manning Napier

Assuming the 90 days horizon Pace Large Growth is expected to under-perform the Manning Napier. In addition to that, Pace Large is 4.55 times more volatile than Manning Napier Core. It trades about -0.03 of its total potential returns per unit of risk. Manning Napier Core is currently generating about 0.0 per unit of volatility. If you would invest  907.00  in Manning Napier Core on October 7, 2024 and sell it today you would earn a total of  1.00  from holding Manning Napier Core or generate 0.11% return on investment over 90 days.

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

Pace Large Growth  vs.  Manning Napier Core

Pace Large Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Manning Napier Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manning Napier Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Manning Napier 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 Large and Manning Napier

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

The idea behind Pace Large Growth and Manning Napier Core 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.