Correlation Between IShares Trust and Pacer Nasdaq
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Pacer Nasdaq 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 Trust and Pacer Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Pacer Nasdaq International, you can compare the effects of market volatilities on IShares Trust and Pacer Nasdaq 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 Trust with a short position of Pacer Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Pacer Nasdaq.
Diversification Opportunities for IShares Trust and Pacer Nasdaq
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IShares and Pacer is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Pacer Nasdaq International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Nasdaq Interna and IShares 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 iShares Trust are associated (or correlated) with Pacer Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Nasdaq Interna has no effect on the direction of IShares Trust i.e., IShares Trust and Pacer Nasdaq go up and down completely randomly.
Pair Corralation between IShares Trust and Pacer Nasdaq
Given the investment horizon of 90 days iShares Trust is expected to under-perform the Pacer Nasdaq. In addition to that, IShares Trust is 1.28 times more volatile than Pacer Nasdaq International. It trades about -0.09 of its total potential returns per unit of risk. Pacer Nasdaq International is currently generating about 0.32 per unit of volatility. If you would invest 2,025 in Pacer Nasdaq International on November 28, 2024 and sell it today you would earn a total of 112.00 from holding Pacer Nasdaq International or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Pacer Nasdaq International
Performance |
| Timeline |
| iShares Trust |
| Pacer Nasdaq Interna |
IShares Trust and Pacer Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Pacer Nasdaq
The main advantage of trading using opposite IShares Trust and Pacer Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Pacer Nasdaq 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 Nasdaq will offset losses from the drop in Pacer Nasdaq's long position.| IShares Trust vs. JPMorgan Fundamental Data | IShares Trust vs. Matthews China Discovery | IShares Trust vs. Vanguard Mid Cap Index | IShares Trust vs. SPDR SP 400 |
| Pacer Nasdaq vs. Strategy Shares | Pacer Nasdaq vs. Freedom Day Dividend | Pacer Nasdaq vs. Franklin Templeton ETF | Pacer Nasdaq vs. iShares MSCI China |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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