Correlation Between Parnassus Fixed and Pax Esg

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

By analyzing existing cross correlation between Parnassus Fixed Income and Pax Esg Beta, you can compare the effects of market volatilities on Parnassus Fixed and Pax Esg 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 Parnassus Fixed with a short position of Pax Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parnassus Fixed and Pax Esg.

Diversification Opportunities for Parnassus Fixed and Pax Esg

0.37

Correlation Coefficient

Parnassus Fixed  Pax Esg

Weak diversification

The 3 months correlation between Parnassus and Pax is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Parnassus Fixed Income and Pax Esg Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Esg Beta and Parnassus Fixed 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 Parnassus Fixed Income are associated (or correlated) with Pax Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Esg Beta has no effect on the direction of Parnassus Fixed i.e., Parnassus Fixed and Pax Esg go up and down completely randomly.

Pair Corralation between Parnassus Fixed and Pax Esg

Assuming the 90 days horizon Parnassus Fixed Income is expected to generate 0.17 times more return on investment than Pax Esg. However, Parnassus Fixed Income is 5.91 times less risky than Pax Esg. It trades about 0.04 of its potential returns per unit of risk. Pax Esg Beta is currently generating about -0.19 per unit of risk. If you would invest  1,482  in Parnassus Fixed Income on December 5, 2024 and sell it today you would earn a total of  9.00  from holding Parnassus Fixed Income or generate 0.61% return on investment over 90 days.

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

Parnassus Fixed Income  vs.  Pax Esg Beta

Parnassus Fixed Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parnassus Fixed Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Parnassus Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pax Esg Beta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pax Esg Beta has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Parnassus Fixed and Pax Esg

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

The idea behind Parnassus Fixed Income and Pax Esg Beta 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.