Correlation Between Embark Commodity and Pace Small/medium

Can any of the company-specific risk be diversified away by investing in both Embark Commodity and Pace Small/medium 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 Embark Commodity and Pace Small/medium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Embark Commodity Strategy and Pace Smallmedium Growth, you can compare the effects of market volatilities on Embark Commodity and Pace Small/medium 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 Embark Commodity with a short position of Pace Small/medium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Commodity and Pace Small/medium.

Diversification Opportunities for Embark Commodity and Pace Small/medium

0.27

Correlation Coefficient

Embark Commodity  Pace Small/medium

Modest diversification

The 3 months correlation between Embark and Pace is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Embark Commodity Strategy and Pace Smallmedium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Growth and Embark Commodity 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 Embark Commodity Strategy are associated (or correlated) with Pace Small/medium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Growth has no effect on the direction of Embark Commodity i.e., Embark Commodity and Pace Small/medium go up and down completely randomly.

Pair Corralation between Embark Commodity and Pace Small/medium

Assuming the 90 days horizon Embark Commodity is expected to generate 3.96 times less return on investment than Pace Small/medium. But when comparing it to its historical volatility, Embark Commodity Strategy is 1.44 times less risky than Pace Small/medium. It trades about 0.08 of its potential returns per unit of risk. Pace Smallmedium Growth is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,209  in Pace Smallmedium Growth on September 5, 2024 and sell it today you would earn a total of  214.00  from holding Pace Smallmedium Growth or generate 17.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Embark Commodity Strategy  vs.  Pace Smallmedium Growth

Embark Commodity Strategy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embark Commodity Strategy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Embark Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pace Smallmedium Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Small/medium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embark Commodity and Pace Small/medium

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

The idea behind Embark Commodity Strategy and Pace Smallmedium Growth 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.