Correlation Between Pace Smallmedium and Short Precious

Can any of the company-specific risk be diversified away by investing in both Pace Smallmedium and Short Precious 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 Pace Smallmedium and Short Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pace Smallmedium Value and Short Precious Metals, you can compare the effects of market volatilities on Pace Smallmedium and Short Precious 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 Pace Smallmedium with a short position of Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Smallmedium and Short Precious.

Diversification Opportunities for Pace Smallmedium and Short Precious

-0.58

Correlation Coefficient

Pace Smallmedium  Short Precious

Excellent diversification

The 3 months correlation between Pace and Short is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals and Pace Smallmedium 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 Pace Smallmedium Value are associated (or correlated) with Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Short Precious go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Short Precious

Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 0.52 times more return on investment than Short Precious. However, Pace Smallmedium Value is 1.93 times less risky than Short Precious. It trades about 0.13 of its potential returns per unit of risk. Short Precious Metals is currently generating about -0.08 per unit of risk. If you would invest  1,546  in Pace Smallmedium Value on May 3, 2025 and sell it today you would earn a total of  141.00  from holding Pace Smallmedium Value or generate 9.12% return on investment over 90 days.

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

Pace Smallmedium Value  vs.  Short Precious Metals

Pace Smallmedium Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Short Precious Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Short Precious Metals has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pace Smallmedium and Short Precious

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

The idea behind Pace Smallmedium Value and Short Precious Metals 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.