Correlation Between Pacer Benchmark and Global X
Can any of the company-specific risk be diversified away by investing in both Pacer Benchmark and Global X 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 Benchmark and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Benchmark Industrial and Global X Data, you can compare the effects of market volatilities on Pacer Benchmark and Global X 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 Benchmark with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Benchmark and Global X.
Diversification Opportunities for Pacer Benchmark and Global X
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacer and Global is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Benchmark Industrial and Global X Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Data and Pacer Benchmark 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 Benchmark Industrial are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Data has no effect on the direction of Pacer Benchmark i.e., Pacer Benchmark and Global X go up and down completely randomly.
Pair Corralation between Pacer Benchmark and Global X
Given the investment horizon of 90 days Pacer Benchmark is expected to generate 1.84 times less return on investment than Global X. But when comparing it to its historical volatility, Pacer Benchmark Industrial is 1.02 times less risky than Global X. It trades about 0.02 of its potential returns per unit of risk. Global X Data is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,265 in Global X Data on August 27, 2024 and sell it today you would earn a total of 210.00 from holding Global X Data or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.27% |
| Values | Daily Returns |
Pacer Benchmark Industrial vs. Global X Data
Performance |
| Timeline |
| Pacer Benchmark Indu |
| Global X Data |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Pacer Benchmark and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Benchmark and Global X
The main advantage of trading using opposite Pacer Benchmark and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Benchmark position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Pacer Benchmark vs. Pacer Benchmark Data | Pacer Benchmark vs. US Diversified Real | Pacer Benchmark vs. Nuveen Short Term REIT |
| Global X vs. Pacer Benchmark Industrial | Global X vs. US Diversified Real | Global X vs. Global X Thematic | Global X vs. Pacer Benchmark Data |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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