Correlation Between Conservative Balanced and Pace International

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

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

Diversification Opportunities for Conservative Balanced and Pace International

0.25

Correlation Coefficient

Conservative Balanced  Pace International

Modest diversification

The 3 months correlation between Conservative and Pace is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Conservative Balanced Allocati and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International and Conservative Balanced 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 Conservative Balanced Allocation are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Conservative Balanced i.e., Conservative Balanced and Pace International go up and down completely randomly.

Pair Corralation between Conservative Balanced and Pace International

Assuming the 90 days horizon Conservative Balanced Allocation is expected to under-perform the Pace International. In addition to that, Conservative Balanced is 1.15 times more volatile than Pace International Emerging. It trades about -0.32 of its total potential returns per unit of risk. Pace International Emerging is currently generating about -0.32 per unit of volatility. If you would invest  1,352  in Pace International Emerging on October 6, 2024 and sell it today you would lose (58.00) from holding Pace International Emerging or give up 4.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Conservative Balanced Allocati  vs.  Pace International Emerging

Conservative Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pace International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace International Emerging 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 primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Conservative Balanced and Pace International

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

The idea behind Conservative Balanced Allocation and Pace International 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.