Correlation Between Qs Growth and Pacific Funds

Can any of the company-specific risk be diversified away by investing in both Qs Growth and Pacific Funds 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 Qs Growth and Pacific Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qs Growth Fund and Pacific Funds E, you can compare the effects of market volatilities on Qs Growth and Pacific Funds 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 Qs Growth with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Growth and Pacific Funds.

Diversification Opportunities for Qs Growth and Pacific Funds

-0.62

Correlation Coefficient

Qs Growth  Pacific Funds

Excellent diversification

The 3 months correlation between LANIX and Pacific is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Qs Growth Fund and Pacific Funds E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds E and Qs Growth 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 Qs Growth Fund are associated (or correlated) with Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds E has no effect on the direction of Qs Growth i.e., Qs Growth and Pacific Funds go up and down completely randomly.

Pair Corralation between Qs Growth and Pacific Funds

Assuming the 90 days horizon Qs Growth Fund is expected to generate 2.41 times more return on investment than Pacific Funds. However, Qs Growth is 2.41 times more volatile than Pacific Funds E. It trades about 0.19 of its potential returns per unit of risk. Pacific Funds E is currently generating about -0.04 per unit of risk. If you would invest  1,754  in Qs Growth Fund on September 4, 2024 and sell it today you would earn a total of  136.00  from holding Qs Growth Fund or generate 7.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Qs Growth Fund  vs.  Pacific Funds E

Qs Growth Fund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Qs Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pacific Funds E

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Qs Growth and Pacific Funds

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

The idea behind Qs Growth Fund and Pacific Funds E 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.