Correlation Between Pacer Cash and IShares Focused
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and IShares Focused 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 IShares Focused 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 iShares Focused Value, you can compare the effects of market volatilities on Pacer Cash and IShares Focused 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 IShares Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and IShares Focused.
Diversification Opportunities for Pacer Cash and IShares Focused
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacer and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and iShares Focused Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Focused Value 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 IShares Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Focused Value has no effect on the direction of Pacer Cash i.e., Pacer Cash and IShares Focused go up and down completely randomly.
Pair Corralation between Pacer Cash and IShares Focused
Given the investment horizon of 90 days Pacer Cash is expected to generate 1.89 times less return on investment than IShares Focused. But when comparing it to its historical volatility, Pacer Cash Cows is 1.22 times less risky than IShares Focused. It trades about 0.07 of its potential returns per unit of risk. iShares Focused Value is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,618 in iShares Focused Value on November 3, 2024 and sell it today you would earn a total of 1,776 from holding iShares Focused Value or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Cash Cows vs. iShares Focused Value
Performance |
| Timeline |
| Pacer Cash Cows |
| iShares Focused Value |
Pacer Cash and IShares Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and IShares Focused
The main advantage of trading using opposite Pacer Cash and IShares Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, IShares Focused 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 IShares Focused will offset losses from the drop in IShares Focused's long position.| Pacer Cash vs. Pacer Small Cap | Pacer Cash vs. Pacer Global Cash | Pacer Cash vs. Amplify CWP Enhanced | Pacer Cash vs. JPMorgan Nasdaq Equity |
| IShares Focused vs. Roundhill Acquirers Deep | IShares Focused vs. BlackRock Equity Factor | IShares Focused vs. iShares MSCI USA | IShares Focused vs. iShares Evolved Discretionary |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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