Correlation Between Pacer Cash and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and IShares Russell 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 Russell 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 Russell Mid Cap, you can compare the effects of market volatilities on Pacer Cash and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and IShares Russell.
Diversification Opportunities for Pacer Cash and IShares Russell
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Mid has no effect on the direction of Pacer Cash i.e., Pacer Cash and IShares Russell go up and down completely randomly.
Pair Corralation between Pacer Cash and IShares Russell
Given the investment horizon of 90 days Pacer Cash Cows is expected to generate 1.34 times more return on investment than IShares Russell. However, Pacer Cash is 1.34 times more volatile than iShares Russell Mid Cap. It trades about -0.02 of its potential returns per unit of risk. iShares Russell Mid Cap is currently generating about -0.05 per unit of risk. If you would invest 5,842 in Pacer Cash Cows on November 18, 2024 and sell it today you would lose (26.00) from holding Pacer Cash Cows or give up 0.45% of portfolio value 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 Russell Mid Cap
Performance |
| Timeline |
| Pacer Cash Cows |
| iShares Russell Mid |
Pacer Cash and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and IShares Russell
The main advantage of trading using opposite Pacer Cash and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell'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 Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell Mid Cap | IShares Russell vs. iShares Russell 1000 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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