Correlation Between Pacer Funds and Pacer Nasdaq
Can any of the company-specific risk be diversified away by investing in both Pacer Funds 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 Pacer Funds and Pacer Nasdaq 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 Pacer Nasdaq International, you can compare the effects of market volatilities on Pacer Funds 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 Pacer Funds with a short position of Pacer Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and Pacer Nasdaq.
Diversification Opportunities for Pacer Funds and Pacer Nasdaq
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacer and Pacer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds 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 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 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 Pacer Funds i.e., Pacer Funds and Pacer Nasdaq go up and down completely randomly.
Pair Corralation between Pacer Funds and Pacer Nasdaq
Given the investment horizon of 90 days Pacer Funds Trust is expected to generate 0.97 times more return on investment than Pacer Nasdaq. However, Pacer Funds Trust is 1.03 times less risky than Pacer Nasdaq. It trades about 0.14 of its potential returns per unit of risk. Pacer Nasdaq International is currently generating about -0.2 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Funds Trust vs. Pacer Nasdaq International
Performance |
| Timeline |
| Pacer Funds Trust |
| Pacer Nasdaq Interna |
Pacer Funds and Pacer Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and Pacer Nasdaq
The main advantage of trading using opposite Pacer Funds and Pacer Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds 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.| Pacer Funds vs. iShares MSCI Emerging | Pacer Funds vs. BMO Long Federal | Pacer Funds vs. iShares MSCI EAFE | Pacer Funds vs. Vanguard Total Market |
| Pacer Nasdaq vs. Dimensional Core Equity | Pacer Nasdaq vs. Dimensional Emerging Core | Pacer Nasdaq vs. Dimensional Targeted Value | Pacer Nasdaq vs. Dimensional Small Cap |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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