Correlation Between IShares Focused and Pacer Small
Can any of the company-specific risk be diversified away by investing in both IShares Focused and Pacer Small 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 Focused and Pacer Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Focused Value and Pacer Small Cap, you can compare the effects of market volatilities on IShares Focused and Pacer Small 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 Focused with a short position of Pacer Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Focused and Pacer Small.
Diversification Opportunities for IShares Focused and Pacer Small
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Pacer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Focused Value and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and IShares Focused 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 Focused Value are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of IShares Focused i.e., IShares Focused and Pacer Small go up and down completely randomly.
Pair Corralation between IShares Focused and Pacer Small
Given the investment horizon of 90 days iShares Focused Value is expected to generate 0.8 times more return on investment than Pacer Small. However, iShares Focused Value is 1.25 times less risky than Pacer Small. It trades about 0.17 of its potential returns per unit of risk. Pacer Small Cap is currently generating about 0.03 per unit of risk. If you would invest 6,005 in iShares Focused Value on September 1, 2024 and sell it today you would earn a total of 1,601 from holding iShares Focused Value or generate 26.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Focused Value vs. Pacer Small Cap
Performance |
| Timeline |
| iShares Focused Value |
| Pacer Small Cap |
IShares Focused and Pacer Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Focused and Pacer Small
The main advantage of trading using opposite IShares Focused and Pacer Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Focused position performs unexpectedly, Pacer Small 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 Small will offset losses from the drop in Pacer Small's long position.| IShares Focused vs. Vanguard Mid Cap Value | IShares Focused vs. SPDR SP Dividend | IShares Focused vs. Pacer Cash Cows | IShares Focused vs. iShares SP Mid Cap |
| Pacer Small vs. Pacer Cash Cows | Pacer Small vs. Pacer Global Cash | Pacer Small vs. Pacer Developed Markets | Pacer Small vs. Invesco SP SmallCap |
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 Stocks Directory module to find actively traded stocks across global markets.
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