Correlation Between Retailing Fund and Pace International

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

By analyzing existing cross correlation between Retailing Fund Class and Pace International Equity, you can compare the effects of market volatilities on Retailing Fund and Pace International 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 Retailing Fund with a short position of Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retailing Fund and Pace International.

Diversification Opportunities for Retailing Fund and Pace International

0.87

Correlation Coefficient

Retailing Fund  Pace International

Very poor diversification

The 3 months correlation between Retailing and Pace is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Retailing Fund Class and Pace International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International Equity and Retailing Fund 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 Retailing Fund Class are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International Equity has no effect on the direction of Retailing Fund i.e., Retailing Fund and Pace International go up and down completely randomly.

Pair Corralation between Retailing Fund and Pace International

Assuming the 90 days horizon Retailing Fund Class is expected to generate 1.49 times more return on investment than Pace International. However, Retailing Fund is 1.49 times more volatile than Pace International Equity. It trades about 0.15 of its potential returns per unit of risk. Pace International Equity is currently generating about 0.12 per unit of risk. If you would invest  4,038  in Retailing Fund Class on May 4, 2025 and sell it today you would earn a total of  369.00  from holding Retailing Fund Class or generate 9.14% return on investment over 90 days.

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

Retailing Fund Class  vs.  Pace International Equity

Retailing Fund Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retailing Fund Class are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady fundamental indicators, Retailing Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pace International Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pace International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Retailing Fund and Pace International

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

The idea behind Retailing Fund Class and Pace International Equity 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.