Correlation Between Volatility Shares and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both Volatility Shares 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 Volatility Shares and Pacer Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and Pacer Benchmark Data, you can compare the effects of market volatilities on Volatility Shares 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 Volatility Shares with a short position of Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Pacer Benchmark.
Diversification Opportunities for Volatility Shares and Pacer Benchmark
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volatility and Pacer is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust 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 Volatility Shares 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 Volatility Shares Trust 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 Volatility Shares i.e., Volatility Shares and Pacer Benchmark go up and down completely randomly.
Pair Corralation between Volatility Shares and Pacer Benchmark
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 6.16 times more return on investment than Pacer Benchmark. However, Volatility Shares is 6.16 times more volatile than Pacer Benchmark Data. It trades about 0.1 of its potential returns per unit of risk. Pacer Benchmark Data is currently generating about 0.03 per unit of risk. If you would invest 1,225 in Volatility Shares Trust on September 12, 2024 and sell it today you would earn a total of 4,608 from holding Volatility Shares Trust or generate 376.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. Pacer Benchmark Data
Performance |
| Timeline |
| Volatility Shares Trust |
| Pacer Benchmark Data |
Volatility Shares and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and Pacer Benchmark
The main advantage of trading using opposite Volatility Shares and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares 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.| Volatility Shares vs. Grayscale Bitcoin Trust | Volatility Shares vs. Siren Nasdaq NexGen | Volatility Shares vs. First Trust Indxx | Volatility Shares vs. Bitwise Crypto Industry |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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