Correlation Between Pacer Emerging and Pacer Cash
Can any of the company-specific risk be diversified away by investing in both Pacer Emerging and Pacer Cash 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 Emerging and Pacer Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Emerging Markets and Pacer Cash Cows, you can compare the effects of market volatilities on Pacer Emerging and Pacer Cash 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 Emerging with a short position of Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Emerging and Pacer Cash.
Diversification Opportunities for Pacer Emerging and Pacer Cash
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacer and Pacer is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Emerging Markets and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and Pacer Emerging 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 Emerging Markets are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Pacer Emerging i.e., Pacer Emerging and Pacer Cash go up and down completely randomly.
Pair Corralation between Pacer Emerging and Pacer Cash
Given the investment horizon of 90 days Pacer Emerging Markets is expected to generate 1.4 times more return on investment than Pacer Cash. However, Pacer Emerging is 1.4 times more volatile than Pacer Cash Cows. It trades about 0.03 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.01 per unit of risk. If you would invest 1,921 in Pacer Emerging Markets on December 5, 2024 and sell it today you would earn a total of 70.00 from holding Pacer Emerging Markets or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Emerging Markets vs. Pacer Cash Cows
Performance |
| Timeline |
| Pacer Emerging Markets |
| Pacer Cash Cows |
Pacer Emerging and Pacer Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Emerging and Pacer Cash
The main advantage of trading using opposite Pacer Emerging and Pacer Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Emerging position performs unexpectedly, Pacer Cash 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 Cash will offset losses from the drop in Pacer Cash's long position.| Pacer Emerging vs. Pacer Cash Cows | ||
| Pacer Emerging vs. Pacer Developed Markets | ||
| Pacer Emerging vs. First Trust Developed | ||
| Pacer Emerging vs. First Trust Dorsey |
| Pacer Cash vs. Pacer Emerging Markets | ||
| Pacer Cash vs. Pacer Developed Markets | ||
| Pacer Cash vs. Pacer Cash Cows | ||
| Pacer Cash vs. First Trust IPOX |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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