Correlation Between Pacer Cash and Affinity World
Can any of the company-specific risk be diversified away by investing in both Pacer Cash and Affinity World 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 Cash and Affinity World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Cash Cows and Affinity World Leaders, you can compare the effects of market volatilities on Pacer Cash and Affinity World 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 Cash with a short position of Affinity World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and Affinity World.
Diversification Opportunities for Pacer Cash and Affinity World
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacer and Affinity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Affinity World Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity World Leaders and Pacer Cash 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 Cash Cows are associated (or correlated) with Affinity World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity World Leaders has no effect on the direction of Pacer Cash i.e., Pacer Cash and Affinity World go up and down completely randomly.
Pair Corralation between Pacer Cash and Affinity World
Given the investment horizon of 90 days Pacer Cash is expected to generate 1.76 times less return on investment than Affinity World. But when comparing it to its historical volatility, Pacer Cash Cows is 1.11 times less risky than Affinity World. It trades about 0.17 of its potential returns per unit of risk. Affinity World Leaders is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,961 in Affinity World Leaders on November 2, 2024 and sell it today you would earn a total of 126.46 from holding Affinity World Leaders or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Cash Cows vs. Affinity World Leaders
Performance |
| Timeline |
| Pacer Cash Cows |
| Affinity World Leaders |
Pacer Cash and Affinity World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Cash and Affinity World
The main advantage of trading using opposite Pacer Cash and Affinity World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, Affinity World 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 Affinity World will offset losses from the drop in Affinity World's long position.| Pacer Cash vs. Pacer Emerging Markets | Pacer Cash vs. Pacer Developed Markets | Pacer Cash vs. Pacer Cash Cows | Pacer Cash vs. First Trust IPOX |
| Affinity World vs. American Century STOXX | Affinity World vs. PIMCO RAFI Dynamic | Affinity World vs. ProShares SP 500 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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