Correlation Between Pacer Large and Pacer Global
Can any of the company-specific risk be diversified away by investing in both Pacer Large and Pacer Global 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 Large and Pacer Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Large Cap and Pacer Global Cash, you can compare the effects of market volatilities on Pacer Large and Pacer Global 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 Large with a short position of Pacer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Large and Pacer Global.
Diversification Opportunities for Pacer Large and Pacer Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacer and Pacer is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Large Cap and Pacer Global Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Global Cash and Pacer Large 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 Large Cap are associated (or correlated) with Pacer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Global Cash has no effect on the direction of Pacer Large i.e., Pacer Large and Pacer Global go up and down completely randomly.
Pair Corralation between Pacer Large and Pacer Global
Given the investment horizon of 90 days Pacer Large Cap is expected to generate 1.48 times more return on investment than Pacer Global. However, Pacer Large is 1.48 times more volatile than Pacer Global Cash. It trades about 0.11 of its potential returns per unit of risk. Pacer Global Cash is currently generating about 0.06 per unit of risk. If you would invest 1,926 in Pacer Large Cap on December 2, 2024 and sell it today you would earn a total of 1,379 from holding Pacer Large Cap or generate 71.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Large Cap vs. Pacer Global Cash
Performance |
| Timeline |
| Pacer Large Cap |
| Pacer Global Cash |
Pacer Large and Pacer Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Large and Pacer Global
The main advantage of trading using opposite Pacer Large and Pacer Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Large position performs unexpectedly, Pacer Global 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 Global will offset losses from the drop in Pacer Global's long position.| Pacer Large vs. Pacer Cash Cows | ||
| Pacer Large vs. Pacer Developed Markets | ||
| Pacer Large vs. Pacer Small Cap | ||
| Pacer Large vs. Pacer Global Cash |
| Pacer Global vs. Pacer Cash Cows | ||
| Pacer Global vs. Pacer Small Cap | ||
| Pacer Global vs. Pacer Developed Markets | ||
| Pacer Global vs. Pacer Trendpilot Large |
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 Stocks Directory module to find actively traded stocks across global markets.
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