Correlation Between Pacer Funds and IHIT
Can any of the company-specific risk be diversified away by investing in both Pacer Funds and IHIT 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 IHIT 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 IHIT, you can compare the effects of market volatilities on Pacer Funds and IHIT 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 IHIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and IHIT.
Diversification Opportunities for Pacer Funds and IHIT
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacer and IHIT is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and IHIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHIT 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 IHIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHIT has no effect on the direction of Pacer Funds i.e., Pacer Funds and IHIT go up and down completely randomly.
Pair Corralation between Pacer Funds and IHIT
Given the investment horizon of 90 days Pacer Funds Trust is expected to generate 1.0 times more return on investment than IHIT. However, Pacer Funds Trust is 1.0 times less risky than IHIT. It trades about 0.15 of its potential returns per unit of risk. IHIT is currently generating about -0.05 per unit of risk. If you would invest 2,000 in Pacer Funds Trust on August 31, 2024 and sell it today you would earn a total of 146.00 from holding Pacer Funds Trust or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 45.59% |
| Values | Daily Returns |
Pacer Funds Trust vs. IHIT
Performance |
| Timeline |
| Pacer Funds Trust |
| IHIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pacer Funds and IHIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and IHIT
The main advantage of trading using opposite Pacer Funds and IHIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds position performs unexpectedly, IHIT 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 IHIT will offset losses from the drop in IHIT's long position.| Pacer Funds vs. WisdomTree Interest Rate | Pacer Funds vs. First Trust Developed | Pacer Funds vs. VictoryShares International Volatility | Pacer Funds vs. Aquagold International |
| IHIT vs. MFS Investment Grade | IHIT vs. Eaton Vance National | IHIT vs. Invesco High Income | IHIT vs. Nuveen California Select |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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