Correlation Between Palmer Square and Rbb Fund

Can any of the company-specific risk be diversified away by investing in both Palmer Square and Rbb Fund 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 Palmer Square and Rbb Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palmer Square Income and Rbb Fund , you can compare the effects of market volatilities on Palmer Square and Rbb Fund 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 Palmer Square with a short position of Rbb Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palmer Square and Rbb Fund.

Diversification Opportunities for Palmer Square and Rbb Fund

0.95

Correlation Coefficient

Palmer Square  Rbb Fund

Almost no diversification

The 3 months correlation between Palmer and Rbb is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Palmer Square Income and Rbb Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbb Fund and Palmer Square 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 Palmer Square Income are associated (or correlated) with Rbb Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbb Fund has no effect on the direction of Palmer Square i.e., Palmer Square and Rbb Fund go up and down completely randomly.

Pair Corralation between Palmer Square and Rbb Fund

Assuming the 90 days horizon Palmer Square is expected to generate 2.8 times less return on investment than Rbb Fund. But when comparing it to its historical volatility, Palmer Square Income is 3.65 times less risky than Rbb Fund. It trades about 0.38 of its potential returns per unit of risk. Rbb Fund is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Rbb Fund on September 14, 2024 and sell it today you would earn a total of  32.00  from holding Rbb Fund or generate 3.39% return on investment over 90 days.

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

Palmer Square Income  vs.  Rbb Fund

Palmer Square Income

Risk-Adjusted Performance

29 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Income are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Palmer Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rbb Fund

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rbb Fund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Rbb Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palmer Square and Rbb Fund

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

The idea behind Palmer Square Income and Rbb Fund 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.