Correlation Between American Century and Pacer Small
Can any of the company-specific risk be diversified away by investing in both American Century and Pacer Small 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 American Century and Pacer Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century ETF and Pacer Small Cap, you can compare the effects of market volatilities on American Century and Pacer Small 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 American Century with a short position of Pacer Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Pacer Small.
Diversification Opportunities for American Century and Pacer Small
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Pacer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and American Century 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 American Century ETF are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of American Century i.e., American Century and Pacer Small go up and down completely randomly.
Pair Corralation between American Century and Pacer Small
Given the investment horizon of 90 days American Century ETF is expected to generate 0.8 times more return on investment than Pacer Small. However, American Century ETF is 1.25 times less risky than Pacer Small. It trades about -0.2 of its potential returns per unit of risk. Pacer Small Cap is currently generating about -0.49 per unit of risk. If you would invest 6,928 in American Century ETF on December 10, 2024 and sell it today you would lose (268.00) from holding American Century ETF or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century ETF vs. Pacer Small Cap
Performance |
| Timeline |
| American Century ETF |
| Pacer Small Cap |
American Century and Pacer Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Pacer Small
The main advantage of trading using opposite American Century and Pacer Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Pacer Small 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 Small will offset losses from the drop in Pacer Small's long position.| American Century vs. Avantis Emerging Markets | American Century vs. Avantis Emerging Markets | American Century vs. Avantis Equity ETF | American Century vs. Avantis International Large |
| Pacer Small vs. Pacer Cash Cows | Pacer Small vs. Pacer Global Cash | Pacer Small vs. Pacer Developed Markets | Pacer Small vs. Invesco SP SmallCap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |