Correlation Between Pax Balanced and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Pax Balanced and Emerging Markets 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 Balanced and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax Balanced Fund and Emerging Markets Portfolio, you can compare the effects of market volatilities on Pax Balanced and Emerging Markets 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 Balanced with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Balanced and Emerging Markets.
Diversification Opportunities for Pax Balanced and Emerging Markets
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pax and Emerging is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pax Balanced Fund and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Pax 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 Pax Balanced Fund are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Pax Balanced i.e., Pax Balanced and Emerging Markets go up and down completely randomly.
Pair Corralation between Pax Balanced and Emerging Markets
Assuming the 90 days horizon Pax Balanced is expected to generate 1.37 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Pax Balanced Fund is 1.67 times less risky than Emerging Markets. It trades about 0.29 of its potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,211 in Emerging Markets Portfolio on May 1, 2025 and sell it today you would earn a total of 260.00 from holding Emerging Markets Portfolio or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pax Balanced Fund vs. Emerging Markets Portfolio
Performance |
| Timeline |
| Pax Balanced |
| Emerging Markets Por |
Pax Balanced and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pax Balanced and Emerging Markets
The main advantage of trading using opposite Pax Balanced and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Balanced position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Pax Balanced vs. Lsv Small Cap | Pax Balanced vs. Palm Valley Capital | Pax Balanced vs. American Century Etf | Pax Balanced vs. Mid Cap 15x Strategy |
| Emerging Markets vs. Global Resources Fund | Emerging Markets vs. Adams Natural Resources | Emerging Markets vs. Jennison Natural Resources | Emerging Markets vs. World Energy Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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