Correlation Between HP and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both HP and Pacer Funds 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 HP and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Pacer Funds Trust, you can compare the effects of market volatilities on HP and Pacer Funds 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 HP with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Pacer Funds.
Diversification Opportunities for HP and Pacer Funds
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HP and Pacer is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust and HP 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 HP Inc are associated (or correlated) with Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of HP i.e., HP and Pacer Funds go up and down completely randomly.
Pair Corralation between HP and Pacer Funds
Considering the 90-day investment horizon HP is expected to generate 6.01 times less return on investment than Pacer Funds. But when comparing it to its historical volatility, HP Inc is 1.02 times less risky than Pacer Funds. It trades about 0.01 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,173 in Pacer Funds Trust on November 28, 2024 and sell it today you would earn a total of 811.00 from holding Pacer Funds Trust or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Pacer Funds Trust
Performance |
| Timeline |
| HP Inc |
| Pacer Funds Trust |
HP and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Pacer Funds
The main advantage of trading using opposite HP and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Pacer Funds 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 Funds will offset losses from the drop in Pacer Funds' long position.The idea behind HP Inc and Pacer Funds Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pacer Funds vs. Strategy Shares | Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Franklin Templeton ETF | Pacer Funds vs. iShares MSCI China |
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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