Correlation Between Pacer Small and Pacer Lunt
Can any of the company-specific risk be diversified away by investing in both Pacer Small and Pacer Lunt 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 Small and Pacer Lunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Small Cap and Pacer Lunt MidCap, you can compare the effects of market volatilities on Pacer Small and Pacer Lunt 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 Small with a short position of Pacer Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Small and Pacer Lunt.
Diversification Opportunities for Pacer Small and Pacer Lunt
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Pacer is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Small Cap and Pacer Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap and Pacer Small 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 Small Cap are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of Pacer Small i.e., Pacer Small and Pacer Lunt go up and down completely randomly.
Pair Corralation between Pacer Small and Pacer Lunt
Given the investment horizon of 90 days Pacer Small Cap is expected to under-perform the Pacer Lunt. But the etf apears to be less risky and, when comparing its historical volatility, Pacer Small Cap is 1.02 times less risky than Pacer Lunt. The etf trades about -0.51 of its potential returns per unit of risk. The Pacer Lunt MidCap is currently generating about -0.44 of returns per unit of risk over similar time horizon. If you would invest 4,800 in Pacer Lunt MidCap on December 8, 2024 and sell it today you would lose (535.00) from holding Pacer Lunt MidCap or give up 11.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pacer Small Cap vs. Pacer Lunt MidCap
Performance |
| Timeline |
| Pacer Small Cap |
| Pacer Lunt MidCap |
Pacer Small and Pacer Lunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Small and Pacer Lunt
The main advantage of trading using opposite Pacer Small and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Small position performs unexpectedly, Pacer Lunt 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 Lunt will offset losses from the drop in Pacer Lunt's long position.| Pacer Small vs. Pacer Cash Cows | ||
| Pacer Small vs. Pacer Global Cash | ||
| Pacer Small vs. Pacer Developed Markets | ||
| Pacer Small vs. Invesco SP SmallCap |
| Pacer Lunt vs. Pacer Lunt Large | ||
| Pacer Lunt vs. Pacer Lunt Large | ||
| Pacer Lunt vs. Pacer Trendpilot Bond | ||
| Pacer Lunt vs. Pacer Cash Cows |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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