Correlation Between Pace Large and New Perspective
Can any of the company-specific risk be diversified away by investing in both Pace Large and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Pace Large and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and New Perspective.
Diversification Opportunities for Pace Large and New Perspective
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and New is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Growth and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Pace Large i.e., Pace Large and New Perspective go up and down completely randomly.
Pair Corralation between Pace Large and New Perspective
Assuming the 90 days horizon Pace Large Growth is expected to under-perform the New Perspective. In addition to that, Pace Large is 1.02 times more volatile than New Perspective Fund. It trades about -0.07 of its total potential returns per unit of risk. New Perspective Fund is currently generating about -0.06 per unit of volatility. If you would invest 6,540 in New Perspective Fund on December 18, 2024 and sell it today you would lose (278.00) from holding New Perspective Fund or give up 4.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pace Large Growth vs. New Perspective Fund
Performance |
Timeline |
Pace Large Growth |
New Perspective |
Pace Large and New Perspective Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pace Large and New Perspective
The main advantage of trading using opposite Pace Large and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.Pace Large vs. Stone Ridge Diversified | Pace Large vs. Western Asset Diversified | Pace Large vs. Harbor Diversified International | Pace Large vs. Jhancock Diversified Macro |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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