Correlation Between IShares Technology and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both IShares Technology 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 IShares Technology and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Technology ETF and Pacer Funds Trust, you can compare the effects of market volatilities on IShares Technology 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 IShares Technology with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and Pacer Funds.
Diversification Opportunities for IShares Technology and Pacer Funds
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Pacer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF 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 IShares Technology 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 Technology ETF 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 IShares Technology i.e., IShares Technology and Pacer Funds go up and down completely randomly.
Pair Corralation between IShares Technology and Pacer Funds
Considering the 90-day investment horizon IShares Technology is expected to generate 2.6 times less return on investment than Pacer Funds. But when comparing it to its historical volatility, iShares Technology ETF is 1.09 times less risky than Pacer Funds. It trades about 0.08 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,852 in Pacer Funds Trust on August 26, 2024 and sell it today you would earn a total of 316.00 from holding Pacer Funds Trust or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Technology ETF vs. Pacer Funds Trust
Performance |
| Timeline |
| iShares Technology ETF |
| Pacer Funds Trust |
IShares Technology and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Technology and Pacer Funds
The main advantage of trading using opposite IShares Technology and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology 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.| IShares Technology vs. Invesco DWA Utilities | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. HUMANA INC |
| Pacer Funds vs. Invesco DWA Utilities | Pacer Funds vs. Invesco Dynamic Large | Pacer Funds vs. Invesco Dynamic Large | Pacer Funds vs. HUMANA INC |
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.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |