Correlation Between Vanguard Total and Pacer Cash
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Pacer Cash 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 Vanguard Total and Pacer Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Pacer Cash Cows, you can compare the effects of market volatilities on Vanguard Total and Pacer Cash 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 Vanguard Total with a short position of Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Pacer Cash.
Diversification Opportunities for Vanguard Total and Pacer Cash
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Pacer is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and Vanguard Total 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 Vanguard Total Bond are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Vanguard Total i.e., Vanguard Total and Pacer Cash go up and down completely randomly.
Pair Corralation between Vanguard Total and Pacer Cash
Considering the 90-day investment horizon Vanguard Total is expected to generate 10.42 times less return on investment than Pacer Cash. But when comparing it to its historical volatility, Vanguard Total Bond is 2.85 times less risky than Pacer Cash. It trades about 0.07 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,623 in Pacer Cash Cows on August 30, 2024 and sell it today you would earn a total of 293.00 from holding Pacer Cash Cows or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Pacer Cash Cows
Performance |
| Timeline |
| Vanguard Total Bond |
| Pacer Cash Cows |
Vanguard Total and Pacer Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Pacer Cash
The main advantage of trading using opposite Vanguard Total and Pacer Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Pacer Cash 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 Cash will offset losses from the drop in Pacer Cash's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
| Pacer Cash vs. Pacer Small Cap | Pacer Cash vs. Pacer Developed Markets | Pacer Cash vs. Pacer Cash Cows | Pacer Cash vs. Pacer Global Cash |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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