Correlation Between Pacer Cash and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and Invesco 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 Invesco 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 Invesco SP MidCap, you can compare the effects of market volatilities on Pacer Cash and Invesco 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and Invesco SP.
Diversification Opportunities for Pacer Cash and Invesco SP
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Invesco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Invesco SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP MidCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP MidCap has no effect on the direction of Pacer Cash i.e., Pacer Cash and Invesco SP go up and down completely randomly.
Pair Corralation between Pacer Cash and Invesco SP
Given the investment horizon of 90 days Pacer Cash is expected to generate 1.08 times less return on investment than Invesco SP. But when comparing it to its historical volatility, Pacer Cash Cows is 1.25 times less risky than Invesco SP. It trades about 0.09 of its potential returns per unit of risk. Invesco SP MidCap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,257 in Invesco SP MidCap on September 1, 2024 and sell it today you would earn a total of 1,306 from holding Invesco SP MidCap or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pacer Cash Cows vs. Invesco SP MidCap
Performance |
| Timeline |
| Pacer Cash Cows |
| Invesco SP MidCap |
Pacer Cash and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and Invesco SP
The main advantage of trading using opposite Pacer Cash and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, Invesco 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 Invesco SP will offset losses from the drop in Invesco 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 |
| Invesco SP vs. Invesco SP SmallCap | Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP MidCap | Invesco SP vs. Invesco FTSE RAFI |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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