Correlation Between Pace Smallmedium and Grandeur Peak

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

By analyzing existing cross correlation between Pace Smallmedium Growth and Grandeur Peak Emerging, you can compare the effects of market volatilities on Pace Smallmedium and Grandeur Peak 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 Smallmedium with a short position of Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Smallmedium and Grandeur Peak.

Diversification Opportunities for Pace Smallmedium and Grandeur Peak

-0.74

Correlation Coefficient

Pace Smallmedium  Grandeur Peak

Pay attention - limited upside

The 3 months correlation between Pace and Grandeur is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Growth and Grandeur Peak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Emerging and Pace Smallmedium 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 Smallmedium Growth are associated (or correlated) with Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Emerging has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Grandeur Peak go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Grandeur Peak

Assuming the 90 days horizon Pace Smallmedium Growth is expected to generate 1.84 times more return on investment than Grandeur Peak. However, Pace Smallmedium is 1.84 times more volatile than Grandeur Peak Emerging. It trades about 0.17 of its potential returns per unit of risk. Grandeur Peak Emerging is currently generating about -0.06 per unit of risk. If you would invest  1,247  in Pace Smallmedium Growth on September 15, 2024 and sell it today you would earn a total of  154.00  from holding Pace Smallmedium Growth or generate 12.35% return on investment over 90 days.

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

Pace Smallmedium Growth  vs.  Grandeur Peak Emerging

Pace Smallmedium Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Growth are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grandeur Peak Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grandeur Peak Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Grandeur Peak 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 Smallmedium and Grandeur Peak

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

The idea behind Pace Smallmedium Growth and Grandeur Peak Emerging 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.