Correlation Between First Trust and Pacer Pacific
Can any of the company-specific risk be diversified away by investing in both First Trust and Pacer Pacific 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 First Trust and Pacer Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust SkyBridge and Pacer Pacific Asset, you can compare the effects of market volatilities on First Trust and Pacer Pacific 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 First Trust with a short position of Pacer Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Pacer Pacific.
Diversification Opportunities for First Trust and Pacer Pacific
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Pacer is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset and First Trust 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 First Trust SkyBridge are associated (or correlated) with Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of First Trust i.e., First Trust and Pacer Pacific go up and down completely randomly.
Pair Corralation between First Trust and Pacer Pacific
Given the investment horizon of 90 days First Trust SkyBridge is expected to generate 45.4 times more return on investment than Pacer Pacific. However, First Trust is 45.4 times more volatile than Pacer Pacific Asset. It trades about 0.09 of its potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.41 per unit of risk. If you would invest 410.00 in First Trust SkyBridge on August 23, 2024 and sell it today you would earn a total of 1,551 from holding First Trust SkyBridge or generate 378.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust SkyBridge vs. Pacer Pacific Asset
Performance |
| Timeline |
| First Trust SkyBridge |
| Pacer Pacific Asset |
First Trust and Pacer Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Pacer Pacific
The main advantage of trading using opposite First Trust and Pacer Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Pacer Pacific 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 Pacer Pacific will offset losses from the drop in Pacer Pacific's long position.| First Trust vs. VanEck Digital Transformation | First Trust vs. Bitwise Crypto Industry | First Trust vs. Global X Blockchain | First Trust vs. First Trust Indxx |
| Pacer Pacific vs. First Trust Senior | Pacer Pacific vs. SPDR Bloomberg Short | Pacer Pacific vs. SPDR Bloomberg Investment | Pacer Pacific vs. iShares Floating Rate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |