Correlation Between Pacer Developed and Pacer Cash
Can any of the company-specific risk be diversified away by investing in both Pacer Developed and Pacer Cash 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 Pacer Cash 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 Pacer Cash Cows, you can compare the effects of market volatilities on Pacer Developed and Pacer Cash 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 Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Developed and Pacer Cash.
Diversification Opportunities for Pacer Developed and Pacer Cash
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pacer and Pacer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Developed Markets and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows 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 Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Pacer Developed i.e., Pacer Developed and Pacer Cash go up and down completely randomly.
Pair Corralation between Pacer Developed and Pacer Cash
Given the investment horizon of 90 days Pacer Developed Markets is expected to generate 0.94 times more return on investment than Pacer Cash. However, Pacer Developed Markets is 1.06 times less risky than Pacer Cash. It trades about 0.03 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.01 per unit of risk. If you would invest 3,010 in Pacer Developed Markets on December 5, 2024 and sell it today you would earn a total of 74.00 from holding Pacer Developed Markets or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Developed Markets vs. Pacer Cash Cows
Performance |
| Timeline |
| Pacer Developed Markets |
| Pacer Cash Cows |
Pacer Developed and Pacer Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Developed and Pacer Cash
The main advantage of trading using opposite Pacer Developed and Pacer Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Developed position performs unexpectedly, Pacer Cash 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 Cash will offset losses from the drop in Pacer Cash'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 |
| Pacer Cash vs. Pacer Emerging Markets | ||
| Pacer Cash vs. Pacer Developed Markets | ||
| Pacer Cash vs. Pacer Cash Cows | ||
| Pacer Cash vs. First Trust IPOX |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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