Correlation Between Pear Tree and Doubleline Emerging

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

By analyzing existing cross correlation between Pear Tree Polaris and Doubleline Emerging Markets, you can compare the effects of market volatilities on Pear Tree and Doubleline Emerging 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 Pear Tree with a short position of Doubleline Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Doubleline Emerging.

Diversification Opportunities for Pear Tree and Doubleline Emerging

0.95

Correlation Coefficient

Pear Tree  Doubleline Emerging

Almost no diversification

The 3 months correlation between Pear and Doubleline is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Doubleline Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Emerging and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Doubleline Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Emerging has no effect on the direction of Pear Tree i.e., Pear Tree and Doubleline Emerging go up and down completely randomly.

Pair Corralation between Pear Tree and Doubleline Emerging

Assuming the 90 days horizon Pear Tree Polaris is expected to generate 2.29 times more return on investment than Doubleline Emerging. However, Pear Tree is 2.29 times more volatile than Doubleline Emerging Markets. It trades about 0.13 of its potential returns per unit of risk. Doubleline Emerging Markets is currently generating about 0.16 per unit of risk. If you would invest  1,040  in Pear Tree Polaris on December 30, 2024 and sell it today you would earn a total of  74.00  from holding Pear Tree Polaris or generate 7.12% return on investment over 90 days.

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

Pear Tree Polaris  vs.  Doubleline Emerging Markets

Pear Tree Polaris

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pear Tree Polaris are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pear Tree may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Doubleline Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Doubleline Emerging Markets are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Doubleline Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pear Tree and Doubleline Emerging

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

The idea behind Pear Tree Polaris and Doubleline Emerging Markets 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.