Correlation Between Pear Tree and Parnassus Mid

Can any of the company-specific risk be diversified away by investing in both Pear Tree and Parnassus Mid 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 Pear Tree and Parnassus Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pear Tree Panagora and Parnassus Mid Cap, you can compare the effects of market volatilities on Pear Tree and Parnassus Mid 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 Pear Tree with a short position of Parnassus Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Parnassus Mid.

Diversification Opportunities for Pear Tree and Parnassus Mid

0.57

Correlation Coefficient

Pear Tree  Parnassus Mid

Very weak diversification

The 3 months correlation between Pear and Parnassus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Panagora and Parnassus Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parnassus Mid Cap and Pear Tree 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 Pear Tree Panagora are associated (or correlated) with Parnassus Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parnassus Mid Cap has no effect on the direction of Pear Tree i.e., Pear Tree and Parnassus Mid go up and down completely randomly.

Pair Corralation between Pear Tree and Parnassus Mid

If you would invest  4,227  in Parnassus Mid Cap on September 2, 2024 and sell it today you would earn a total of  259.00  from holding Parnassus Mid Cap or generate 6.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Pear Tree Panagora  vs.  Parnassus Mid Cap

Pear Tree Panagora

Risk-Adjusted Performance

0 of 100

Very Weak

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

Parnassus Mid Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parnassus Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Parnassus Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pear Tree and Parnassus Mid

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

The idea behind Pear Tree Panagora and Parnassus Mid Cap 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.