Correlation Between Pacer Funds and FT Vest
Can any of the company-specific risk be diversified away by investing in both Pacer Funds and FT Vest 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 Funds and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Funds Trust and FT Vest Equity, you can compare the effects of market volatilities on Pacer Funds and FT Vest 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 Funds with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and FT Vest.
Diversification Opportunities for Pacer Funds and FT Vest
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacer and DHDG is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and Pacer Funds 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 Funds Trust are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Pacer Funds i.e., Pacer Funds and FT Vest go up and down completely randomly.
Pair Corralation between Pacer Funds and FT Vest
Given the investment horizon of 90 days Pacer Funds Trust is expected to generate 2.24 times more return on investment than FT Vest. However, Pacer Funds is 2.24 times more volatile than FT Vest Equity. It trades about 0.14 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.17 per unit of risk. If you would invest 2,063 in Pacer Funds Trust on August 26, 2024 and sell it today you would earn a total of 60.00 from holding Pacer Funds Trust or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Funds Trust vs. FT Vest Equity
Performance |
| Timeline |
| Pacer Funds Trust |
| FT Vest Equity |
Pacer Funds and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and FT Vest
The main advantage of trading using opposite Pacer Funds and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Pacer Funds vs. iShares MSCI Emerging | Pacer Funds vs. BMO Long Federal | Pacer Funds vs. iShares MSCI EAFE | Pacer Funds vs. Vanguard Total Market |
| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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