Correlation Between Target Retirement and Pace International
Can any of the company-specific risk be diversified away by investing in both Target Retirement 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 Target Retirement and Pace International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Pace International Emerging, you can compare the effects of market volatilities on Target Retirement 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 Target Retirement with a short position of Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Pace International.
Diversification Opportunities for Target Retirement and Pace International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Target and Pace is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International and Target Retirement 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 Target Retirement 2040 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 Target Retirement i.e., Target Retirement and Pace International go up and down completely randomly.
Pair Corralation between Target Retirement and Pace International
Assuming the 90 days horizon Target Retirement is expected to generate 1.55 times less return on investment than Pace International. But when comparing it to its historical volatility, Target Retirement 2040 is 1.47 times less risky than Pace International. It trades about 0.19 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,467 in Pace International Emerging on June 7, 2025 and sell it today you would earn a total of 128.00 from holding Pace International Emerging or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Retirement 2040 vs. Pace International Emerging
Performance |
| Timeline |
| Target Retirement 2040 |
| Pace International |
Target Retirement and Pace International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Pace International
The main advantage of trading using opposite Target Retirement and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement 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.| Target Retirement vs. Jhancock Disciplined Value | Target Retirement vs. Prudential Qma Large Cap | Target Retirement vs. Fidelity Large Cap | Target Retirement vs. Vanguard Large Cap Index |
| Pace International vs. Target Retirement 2040 | Pace International vs. Voya Target Retirement | Pace International vs. Qs Moderate Growth | Pace International vs. Sierra E Retirement |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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