Correlation Between Third Avenue and Pace Global
Can any of the company-specific risk be diversified away by investing in both Third Avenue and Pace Global 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 Third Avenue and Pace Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Small Cap and Pace Global Real, you can compare the effects of market volatilities on Third Avenue and Pace Global 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 Third Avenue with a short position of Pace Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Pace Global.
Diversification Opportunities for Third Avenue and Pace Global
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Third and Pace is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Small Cap and Pace Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Global Real and Third Avenue 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 Third Avenue Small Cap are associated (or correlated) with Pace Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Global Real has no effect on the direction of Third Avenue i.e., Third Avenue and Pace Global go up and down completely randomly.
Pair Corralation between Third Avenue and Pace Global
Assuming the 90 days horizon Third Avenue Small Cap is expected to generate 1.41 times more return on investment than Pace Global. However, Third Avenue is 1.41 times more volatile than Pace Global Real. It trades about 0.27 of its potential returns per unit of risk. Pace Global Real is currently generating about 0.13 per unit of risk. If you would invest 1,685 in Third Avenue Small Cap on April 22, 2025 and sell it today you would earn a total of 294.00 from holding Third Avenue Small Cap or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Small Cap vs. Pace Global Real
Performance |
| Timeline |
| Third Avenue Small |
| Pace Global Real |
Third Avenue and Pace Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Pace Global
The main advantage of trading using opposite Third Avenue and Pace Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue position performs unexpectedly, Pace Global 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 Global will offset losses from the drop in Pace Global's long position.| Third Avenue vs. Third Avenue Value | Third Avenue vs. Third Avenue Real | Third Avenue vs. Muhlenkamp Fund Institutional | Third Avenue vs. Longleaf Partners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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