Correlation Between Pax Esg and Portfolio

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

By analyzing existing cross correlation between Pax Esg Beta and Portfolio 21 Global, you can compare the effects of market volatilities on Pax Esg and Portfolio 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 Pax Esg with a short position of Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Esg and Portfolio.

Diversification Opportunities for Pax Esg and Portfolio

0.81

Correlation Coefficient

Pax Esg  Portfolio

Very poor diversification

The 3 months correlation between Pax and Portfolio is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pax Esg Beta and Portfolio 21 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portfolio 21 Global and Pax Esg 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 Pax Esg Beta are associated (or correlated) with Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portfolio 21 Global has no effect on the direction of Pax Esg i.e., Pax Esg and Portfolio go up and down completely randomly.

Pair Corralation between Pax Esg and Portfolio

Assuming the 90 days horizon Pax Esg Beta is expected to under-perform the Portfolio. In addition to that, Pax Esg is 1.11 times more volatile than Portfolio 21 Global. It trades about -0.11 of its total potential returns per unit of risk. Portfolio 21 Global is currently generating about -0.04 per unit of volatility. If you would invest  5,521  in Portfolio 21 Global on December 29, 2024 and sell it today you would lose (137.00) from holding Portfolio 21 Global or give up 2.48% of portfolio value over 90 days.

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

Pax Esg Beta  vs.  Portfolio 21 Global

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Portfolio 21 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portfolio 21 Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pax Esg and Portfolio

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

The idea behind Pax Esg Beta and Portfolio 21 Global 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.