Correlation Between FlexShares STOXX and Pacer Solactive
Can any of the company-specific risk be diversified away by investing in both FlexShares STOXX 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 FlexShares STOXX and Pacer Solactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares STOXX Global and Pacer Solactive Whitney, you can compare the effects of market volatilities on FlexShares STOXX 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 FlexShares STOXX with a short position of Pacer Solactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares STOXX and Pacer Solactive.
Diversification Opportunities for FlexShares STOXX and Pacer Solactive
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FlexShares and Pacer is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares STOXX Global 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 FlexShares STOXX 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 FlexShares STOXX Global 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 FlexShares STOXX i.e., FlexShares STOXX and Pacer Solactive go up and down completely randomly.
Pair Corralation between FlexShares STOXX and Pacer Solactive
Given the investment horizon of 90 days FlexShares STOXX is expected to generate 1.5 times less return on investment than Pacer Solactive. But when comparing it to its historical volatility, FlexShares STOXX Global is 1.09 times less risky than Pacer Solactive. It trades about 0.18 of its potential returns per unit of risk. Pacer Solactive Whitney is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,412 in Pacer Solactive Whitney on November 3, 2024 and sell it today you would earn a total of 103.00 from holding Pacer Solactive Whitney or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares STOXX Global vs. Pacer Solactive Whitney
Performance |
| Timeline |
| FlexShares STOXX Global |
| Pacer Solactive Whitney |
FlexShares STOXX and Pacer Solactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares STOXX and Pacer Solactive
The main advantage of trading using opposite FlexShares STOXX and Pacer Solactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares STOXX 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.| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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