Correlation Between SPDR SP and Pacer Export
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Pacer Export 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 Export into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 400 and Pacer Export Leaders, you can compare the effects of market volatilities on SPDR SP and Pacer Export 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 Export. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Pacer Export.
Diversification Opportunities for SPDR SP and Pacer Export
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Pacer is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and Pacer Export Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Export Leaders 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 400 are associated (or correlated) with Pacer Export. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Export Leaders has no effect on the direction of SPDR SP i.e., SPDR SP and Pacer Export go up and down completely randomly.
Pair Corralation between SPDR SP and Pacer Export
Given the investment horizon of 90 days SPDR SP 400 is expected to generate 1.03 times more return on investment than Pacer Export. However, SPDR SP is 1.03 times more volatile than Pacer Export Leaders. It trades about 0.3 of its potential returns per unit of risk. Pacer Export Leaders is currently generating about 0.07 per unit of risk. If you would invest 8,784 in SPDR SP 400 on August 28, 2024 and sell it today you would earn a total of 706.00 from holding SPDR SP 400 or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 400 vs. Pacer Export Leaders
Performance |
| Timeline |
| SPDR SP 400 |
| Pacer Export Leaders |
SPDR SP and Pacer Export Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Pacer Export
The main advantage of trading using opposite SPDR SP and Pacer Export positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Pacer Export 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 Export will offset losses from the drop in Pacer Export's long position.The idea behind SPDR SP 400 and Pacer Export Leaders pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pacer Export vs. ProShares SP 500 | Pacer Export vs. ProShares SP 500 | Pacer Export vs. ProShares SP 500 | Pacer Export vs. DBX ETF Trust |
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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