Correlation Between Themes Transatlantic and Pacer Solactive
Can any of the company-specific risk be diversified away by investing in both Themes Transatlantic and Pacer Solactive 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 Themes Transatlantic and Pacer Solactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Themes Transatlantic Defense and Pacer Solactive Whitney, you can compare the effects of market volatilities on Themes Transatlantic and Pacer Solactive 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 Themes Transatlantic with a short position of Pacer Solactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themes Transatlantic and Pacer Solactive.
Diversification Opportunities for Themes Transatlantic and Pacer Solactive
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Themes and Pacer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Themes Transatlantic Defense and Pacer Solactive Whitney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Solactive Whitney and Themes Transatlantic 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 Themes Transatlantic Defense are associated (or correlated) with Pacer Solactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Solactive Whitney has no effect on the direction of Themes Transatlantic i.e., Themes Transatlantic and Pacer Solactive go up and down completely randomly.
Pair Corralation between Themes Transatlantic and Pacer Solactive
Given the investment horizon of 90 days Themes Transatlantic Defense is expected to generate 1.14 times more return on investment than Pacer Solactive. However, Themes Transatlantic is 1.14 times more volatile than Pacer Solactive Whitney. It trades about 0.33 of its potential returns per unit of risk. Pacer Solactive Whitney is currently generating about 0.24 per unit of risk. If you would invest 2,531 in Themes Transatlantic Defense on November 3, 2024 and sell it today you would earn a total of 172.00 from holding Themes Transatlantic Defense or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Themes Transatlantic Defense vs. Pacer Solactive Whitney
Performance |
| Timeline |
| Themes Transatlantic |
| Pacer Solactive Whitney |
Themes Transatlantic and Pacer Solactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Themes Transatlantic and Pacer Solactive
The main advantage of trading using opposite Themes Transatlantic and Pacer Solactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Themes Transatlantic position performs unexpectedly, Pacer Solactive 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 Solactive will offset losses from the drop in Pacer Solactive's long position.| Themes Transatlantic vs. Ultimus Managers Trust | Themes Transatlantic vs. American Beacon Select | Themes Transatlantic vs. First Trust Indxx | Themes Transatlantic vs. Direxion Daily SP |
| Pacer Solactive vs. Ultimus Managers Trust | Pacer Solactive vs. American Beacon Select | Pacer Solactive vs. First Trust Indxx | Pacer Solactive vs. Direxion Daily SP |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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