Correlation Between Pacer Cash and Vanguard Momentum
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and Vanguard Momentum 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 Pacer Cash and Vanguard Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Cash Cows and Vanguard Momentum Factor, you can compare the effects of market volatilities on Pacer Cash and Vanguard Momentum 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 Pacer Cash with a short position of Vanguard Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and Vanguard Momentum.
Diversification Opportunities for Pacer Cash and Vanguard Momentum
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Vanguard Momentum Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Momentum Factor and Pacer Cash 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 Pacer Cash Cows are associated (or correlated) with Vanguard Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Momentum Factor has no effect on the direction of Pacer Cash i.e., Pacer Cash and Vanguard Momentum go up and down completely randomly.
Pair Corralation between Pacer Cash and Vanguard Momentum
Considering the 90-day investment horizon Pacer Cash Cows is expected to generate 0.73 times more return on investment than Vanguard Momentum. However, Pacer Cash Cows is 1.37 times less risky than Vanguard Momentum. It trades about 0.25 of its potential returns per unit of risk. Vanguard Momentum Factor is currently generating about 0.17 per unit of risk. If you would invest 4,648 in Pacer Cash Cows on October 20, 2024 and sell it today you would earn a total of 200.00 from holding Pacer Cash Cows or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Cash Cows vs. Vanguard Momentum Factor
Performance |
| Timeline |
| Pacer Cash Cows |
| Vanguard Momentum Factor |
Pacer Cash and Vanguard Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and Vanguard Momentum
The main advantage of trading using opposite Pacer Cash and Vanguard Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, Vanguard Momentum 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 Vanguard Momentum will offset losses from the drop in Vanguard Momentum's long position.| Pacer Cash vs. Vanguard Mid Cap Index | Pacer Cash vs. Vanguard Extended Market | Pacer Cash vs. iShares Core SP | Pacer Cash vs. iShares Russell Mid Cap |
| Vanguard Momentum vs. Vanguard Quality Factor | Vanguard Momentum vs. Vanguard Multifactor | Vanguard Momentum vs. Vanguard Value Factor | Vanguard Momentum vs. Vanguard Minimum Volatility |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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