Correlation Between Moderately Aggressive and Pax Msci

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

By analyzing existing cross correlation between Moderately Aggressive Balanced and Pax Msci Eafe, you can compare the effects of market volatilities on Moderately Aggressive and Pax Msci 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 Moderately Aggressive with a short position of Pax Msci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderately Aggressive and Pax Msci.

Diversification Opportunities for Moderately Aggressive and Pax Msci

-0.23

Correlation Coefficient

Moderately Aggressive  Pax Msci

Very good diversification

The 3 months correlation between Moderately and Pax is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced and Pax Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Msci Eafe and Moderately Aggressive 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 Moderately Aggressive Balanced are associated (or correlated) with Pax Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Msci Eafe has no effect on the direction of Moderately Aggressive i.e., Moderately Aggressive and Pax Msci go up and down completely randomly.

Pair Corralation between Moderately Aggressive and Pax Msci

Assuming the 90 days horizon Moderately Aggressive Balanced is expected to under-perform the Pax Msci. But the mutual fund apears to be less risky and, when comparing its historical volatility, Moderately Aggressive Balanced is 1.24 times less risky than Pax Msci. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Pax Msci Eafe is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,021  in Pax Msci Eafe on December 21, 2024 and sell it today you would earn a total of  107.00  from holding Pax Msci Eafe or generate 10.48% return on investment over 90 days.

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

Moderately Aggressive Balanced  vs.  Pax Msci Eafe

Moderately Aggressive

Risk-Adjusted Performance

Very Weak

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

Pax Msci Eafe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Msci Eafe are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Pax Msci may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Moderately Aggressive and Pax Msci

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

The idea behind Moderately Aggressive Balanced and Pax Msci Eafe 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 Commodity Directory module to find actively traded commodities issued by global exchanges.