Correlation Between Pacer Cash and IShares SP
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and IShares SP 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 SP 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 SP Mid Cap, you can compare the effects of market volatilities on Pacer Cash and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and IShares SP.
Diversification Opportunities for Pacer Cash and IShares SP
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and iShares SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Mid 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Mid has no effect on the direction of Pacer Cash i.e., Pacer Cash and IShares SP go up and down completely randomly.
Pair Corralation between Pacer Cash and IShares SP
Given the investment horizon of 90 days Pacer Cash is expected to generate 1.24 times less return on investment than IShares SP. But when comparing it to its historical volatility, Pacer Cash Cows is 1.4 times less risky than IShares SP. It trades about 0.29 of its potential returns per unit of risk. iShares SP Mid Cap is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 12,500 in iShares SP Mid Cap on August 27, 2024 and sell it today you would earn a total of 836.00 from holding iShares SP Mid Cap or generate 6.69% 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. iShares SP Mid Cap
Performance |
| Timeline |
| Pacer Cash Cows |
| iShares SP Mid |
Pacer Cash and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and IShares SP
The main advantage of trading using opposite Pacer Cash and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP'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 SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP 500 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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