Correlation Between SPDR SP and Pacer Trendpilot
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Pacer Trendpilot 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 SPDR SP and Pacer Trendpilot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP MIDCAP and Pacer Trendpilot Mid, you can compare the effects of market volatilities on SPDR SP and Pacer Trendpilot 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 SPDR SP with a short position of Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Pacer Trendpilot.
Diversification Opportunities for SPDR SP and Pacer Trendpilot
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Pacer is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and Pacer Trendpilot Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot Mid and SPDR SP 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 SPDR SP MIDCAP are associated (or correlated) with Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot Mid has no effect on the direction of SPDR SP i.e., SPDR SP and Pacer Trendpilot go up and down completely randomly.
Pair Corralation between SPDR SP and Pacer Trendpilot
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to generate 0.99 times more return on investment than Pacer Trendpilot. However, SPDR SP MIDCAP is 1.01 times less risky than Pacer Trendpilot. It trades about 0.34 of its potential returns per unit of risk. Pacer Trendpilot Mid is currently generating about 0.33 per unit of risk. If you would invest 56,679 in SPDR SP MIDCAP on September 2, 2024 and sell it today you would earn a total of 4,907 from holding SPDR SP MIDCAP or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. Pacer Trendpilot Mid
Performance |
| Timeline |
| SPDR SP MIDCAP |
| Pacer Trendpilot Mid |
SPDR SP and Pacer Trendpilot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Pacer Trendpilot
The main advantage of trading using opposite SPDR SP and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Pacer Trendpilot 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 Trendpilot will offset losses from the drop in Pacer Trendpilot's long position.| SPDR SP vs. iShares Core SP | SPDR SP vs. iShares Russell 2000 | SPDR SP vs. iShares MSCI EAFE | SPDR SP vs. iShares Russell 2000 |
| Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot 100 | Pacer Trendpilot vs. Pacer Trendpilot European | Pacer Trendpilot vs. Pacer Trendpilot International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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