Correlation Between IShares MSCI and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 IShares MSCI and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Pacer Funds Trust, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Pacer Funds.
Diversification Opportunities for IShares MSCI and Pacer Funds
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Pacer is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE 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 IShares MSCI 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 iShares MSCI EAFE 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 IShares MSCI i.e., IShares MSCI and Pacer Funds go up and down completely randomly.
Pair Corralation between IShares MSCI and Pacer Funds
Considering the 90-day investment horizon iShares MSCI EAFE is expected to under-perform the Pacer Funds. In addition to that, IShares MSCI is 1.23 times more volatile than Pacer Funds Trust. It trades about -0.16 of its total potential returns per unit of risk. Pacer Funds Trust is currently generating about -0.06 per unit of volatility. If you would invest 1,971 in Pacer Funds Trust on August 30, 2024 and sell it today you would lose (20.00) from holding Pacer Funds Trust or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Pacer Funds Trust
Performance |
| Timeline |
| iShares MSCI EAFE |
| Pacer Funds Trust |
IShares MSCI and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Pacer Funds
The main advantage of trading using opposite IShares MSCI and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares Russell Mid Cap | IShares MSCI vs. iShares MSCI Netherlands |
| Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Franklin Templeton ETF | Pacer Funds vs. iShares MSCI China | Pacer Funds vs. Tidal Trust II |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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