Correlation Between Pacer Developed and Dimensional Targeted
Can any of the company-specific risk be diversified away by investing in both Pacer Developed and Dimensional Targeted 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 Developed and Dimensional Targeted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Developed Markets and Dimensional Targeted Value, you can compare the effects of market volatilities on Pacer Developed and Dimensional Targeted 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 Developed with a short position of Dimensional Targeted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Developed and Dimensional Targeted.
Diversification Opportunities for Pacer Developed and Dimensional Targeted
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacer and Dimensional is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Developed Markets and Dimensional Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Targeted and Pacer Developed 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 Developed Markets are associated (or correlated) with Dimensional Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Targeted has no effect on the direction of Pacer Developed i.e., Pacer Developed and Dimensional Targeted go up and down completely randomly.
Pair Corralation between Pacer Developed and Dimensional Targeted
Given the investment horizon of 90 days Pacer Developed is expected to generate 3.06 times less return on investment than Dimensional Targeted. But when comparing it to its historical volatility, Pacer Developed Markets is 1.41 times less risky than Dimensional Targeted. It trades about 0.03 of its potential returns per unit of risk. Dimensional Targeted Value is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,494 in Dimensional Targeted Value on August 31, 2024 and sell it today you would earn a total of 1,571 from holding Dimensional Targeted Value or generate 34.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Developed Markets vs. Dimensional Targeted Value
Performance |
| Timeline |
| Pacer Developed Markets |
| Dimensional Targeted |
Pacer Developed and Dimensional Targeted Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Developed and Dimensional Targeted
The main advantage of trading using opposite Pacer Developed and Dimensional Targeted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Developed position performs unexpectedly, Dimensional Targeted 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 Dimensional Targeted will offset losses from the drop in Dimensional Targeted's long position.| Pacer Developed vs. Pacer Global Cash | Pacer Developed vs. Pacer Small Cap | Pacer Developed vs. Pacer Emerging Markets | Pacer Developed vs. Pacer Cash Cows |
| Dimensional Targeted vs. Dimensional Small Cap | Dimensional Targeted vs. Dimensional Core Equity | Dimensional Targeted vs. Dimensional International Value | Dimensional Targeted vs. Dimensional Equity ETF |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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