Correlation Between IShares Core and Pacer Financial
Can any of the company-specific risk be diversified away by investing in both IShares Core and Pacer Financial 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 IShares Core and Pacer Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Pacer Financial, you can compare the effects of market volatilities on IShares Core and Pacer Financial 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 IShares Core with a short position of Pacer Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Pacer Financial.
Diversification Opportunities for IShares Core and Pacer Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Pacer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Pacer Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Financial and IShares Core 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 iShares Core SP are associated (or correlated) with Pacer Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Financial has no effect on the direction of IShares Core i.e., IShares Core and Pacer Financial go up and down completely randomly.
Pair Corralation between IShares Core and Pacer Financial
Considering the 90-day investment horizon iShares Core SP is expected to generate 1.01 times more return on investment than Pacer Financial. However, IShares Core is 1.01 times more volatile than Pacer Financial. It trades about 0.11 of its potential returns per unit of risk. Pacer Financial is currently generating about 0.11 per unit of risk. If you would invest 38,861 in iShares Core SP on September 2, 2024 and sell it today you would earn a total of 21,646 from holding iShares Core SP or generate 55.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.85% |
| Values | Daily Returns |
iShares Core SP vs. Pacer Financial
Performance |
| Timeline |
| iShares Core SP |
| Pacer Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Core and Pacer Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Pacer Financial
The main advantage of trading using opposite IShares Core and Pacer Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Pacer Financial 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 Financial will offset losses from the drop in Pacer Financial's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Pacer Financial vs. Vanguard Total Stock | Pacer Financial vs. SPDR SP 500 | Pacer Financial vs. iShares Core SP | Pacer Financial vs. Vanguard Dividend Appreciation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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