Correlation Between Pacific Funds and Tax-managed

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

By analyzing existing cross correlation between Pacific Funds Small Cap and Tax Managed Mid Small, you can compare the effects of market volatilities on Pacific Funds and Tax-managed 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 Pacific Funds with a short position of Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Tax-managed.

Diversification Opportunities for Pacific Funds and Tax-managed

0.0

Correlation Coefficient

Pacific Funds  Tax-managed

Pay attention - limited upside

The 3 months correlation between Pacific and Tax-managed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Small Cap and Tax Managed Mid Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Mid and Pacific Funds 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 Pacific Funds Small Cap are associated (or correlated) with Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Mid has no effect on the direction of Pacific Funds i.e., Pacific Funds and Tax-managed go up and down completely randomly.

Pair Corralation between Pacific Funds and Tax-managed

Assuming the 90 days horizon Pacific Funds Small Cap is expected to under-perform the Tax-managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pacific Funds Small Cap is 1.01 times less risky than Tax-managed. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Tax Managed Mid Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,515  in Tax Managed Mid Small on August 16, 2024 and sell it today you would earn a total of  983.00  from holding Tax Managed Mid Small or generate 27.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	24.44%
Values	Daily Returns

Pacific Funds Small Cap  vs.  Tax Managed Mid Small

Pacific Funds Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Funds Small Cap 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.

Tax Managed Mid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Mid Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tax-managed may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Pacific Funds and Tax-managed

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

The idea behind Pacific Funds Small Cap and Tax Managed Mid Small 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.