Correlation Between Themes Natural and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Themes Natural and Pacer Funds 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 Themes Natural and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Themes Natural Monopoly and Pacer Funds Trust, you can compare the effects of market volatilities on Themes Natural and Pacer Funds 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 Themes Natural with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themes Natural and Pacer Funds.
Diversification Opportunities for Themes Natural and Pacer Funds
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Themes and Pacer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Themes Natural Monopoly and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust and Themes Natural 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 Themes Natural Monopoly are associated (or correlated) with Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Themes Natural i.e., Themes Natural and Pacer Funds go up and down completely randomly.
Pair Corralation between Themes Natural and Pacer Funds
Given the investment horizon of 90 days Themes Natural Monopoly is expected to generate 0.72 times more return on investment than Pacer Funds. However, Themes Natural Monopoly is 1.4 times less risky than Pacer Funds. It trades about 0.19 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.11 per unit of risk. If you would invest 2,931 in Themes Natural Monopoly on August 30, 2024 and sell it today you would earn a total of 84.00 from holding Themes Natural Monopoly or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Themes Natural Monopoly vs. Pacer Funds Trust
Performance |
| Timeline |
| Themes Natural Monopoly |
| Pacer Funds Trust |
Themes Natural and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Themes Natural and Pacer Funds
The main advantage of trading using opposite Themes Natural and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Themes Natural position performs unexpectedly, Pacer Funds 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 Funds will offset losses from the drop in Pacer Funds' long position.| Themes Natural vs. JPMorgan BetaBuilders International | Themes Natural vs. JPMorgan Core Plus | Themes Natural vs. JPMorgan BetaBuilders Canada | Themes Natural vs. JPMorgan Emerging Markets |
| Pacer Funds vs. Invesco Actively Managed | Pacer Funds vs. iShares Trust | Pacer Funds vs. Xtrackers MSCI Emerging | Pacer Funds vs. iShares MSCI Emerging |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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