Correlation Between High-yield Municipal and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Pacer Benchmark 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 High-yield Municipal and Pacer Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Pacer Benchmark Data, you can compare the effects of market volatilities on High-yield Municipal and Pacer Benchmark 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 High-yield Municipal with a short position of Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Pacer Benchmark.
Diversification Opportunities for High-yield Municipal and Pacer Benchmark
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High-yield and Pacer is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Pacer Benchmark Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Data and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Data has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Pacer Benchmark go up and down completely randomly.
Pair Corralation between High-yield Municipal and Pacer Benchmark
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.51 times more return on investment than Pacer Benchmark. However, High Yield Municipal Fund is 1.96 times less risky than Pacer Benchmark. It trades about -0.2 of its potential returns per unit of risk. Pacer Benchmark Data is currently generating about -0.21 per unit of risk. If you would invest 881.00 in High Yield Municipal Fund on January 14, 2025 and sell it today you would lose (40.00) from holding High Yield Municipal Fund or give up 4.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Pacer Benchmark Data
Performance |
| Timeline |
| High Yield Municipal |
| Pacer Benchmark Data |
High-yield Municipal and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Pacer Benchmark
The main advantage of trading using opposite High-yield Municipal and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Pacer Benchmark 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 Pacer Benchmark will offset losses from the drop in Pacer Benchmark's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Pacer Benchmark vs. Pacer Benchmark Industrial | Pacer Benchmark vs. First Trust NASDAQ | Pacer Benchmark vs. Global X Internet | Pacer Benchmark vs. ProShares Online Retail |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |