Correlation Between Dow Jones and Pacer Trendpilot
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pacer Trendpilot 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 Dow Jones and Pacer Trendpilot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Pacer Trendpilot 100, you can compare the effects of market volatilities on Dow Jones and Pacer Trendpilot 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 Dow Jones with a short position of Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pacer Trendpilot.
Diversification Opportunities for Dow Jones and Pacer Trendpilot
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Pacer is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pacer Trendpilot 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot 100 and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot 100 has no effect on the direction of Dow Jones i.e., Dow Jones and Pacer Trendpilot go up and down completely randomly.
Pair Corralation between Dow Jones and Pacer Trendpilot
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Pacer Trendpilot. In addition to that, Dow Jones is 1.12 times more volatile than Pacer Trendpilot 100. It trades about -0.19 of its total potential returns per unit of risk. Pacer Trendpilot 100 is currently generating about 0.01 per unit of volatility. If you would invest 7,450 in Pacer Trendpilot 100 on November 28, 2024 and sell it today you would earn a total of 7.00 from holding Pacer Trendpilot 100 or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pacer Trendpilot 100
Performance |
| Timeline |
Dow Jones and Pacer Trendpilot Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pacer Trendpilot 100
Pair trading matchups for Pacer Trendpilot
Pair Trading with Dow Jones and Pacer Trendpilot
The main advantage of trading using opposite Dow Jones and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pacer Trendpilot 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 Trendpilot will offset losses from the drop in Pacer Trendpilot's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot Mid | Pacer Trendpilot vs. Pacer Trendpilot European | Pacer Trendpilot vs. Nuveen ESG Large Cap |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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