Correlation Between Pacer Cash and First Trust
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and First Trust 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 First Trust 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 First Trust Bloomberg, you can compare the effects of market volatilities on Pacer Cash and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and First Trust.
Diversification Opportunities for Pacer Cash and First Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pacer and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and First Trust Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Bloomberg 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Bloomberg has no effect on the direction of Pacer Cash i.e., Pacer Cash and First Trust go up and down completely randomly.
Pair Corralation between Pacer Cash and First Trust
Given the investment horizon of 90 days Pacer Cash Cows is expected to generate 0.74 times more return on investment than First Trust. However, Pacer Cash Cows is 1.35 times less risky than First Trust. It trades about 0.42 of its potential returns per unit of risk. First Trust Bloomberg is currently generating about 0.21 per unit of risk. If you would invest 5,648 in Pacer Cash Cows on November 1, 2024 and sell it today you would earn a total of 267.00 from holding Pacer Cash Cows or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Cash Cows vs. First Trust Bloomberg
Performance |
| Timeline |
| Pacer Cash Cows |
| First Trust Bloomberg |
Pacer Cash and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and First Trust
The main advantage of trading using opposite Pacer Cash and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. Freedom Day Dividend | First Trust vs. Franklin Templeton ETF | First Trust vs. iShares MSCI China | First Trust vs. Tidal Trust II |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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