Correlation Between US Treasury and Pacer Small
Can any of the company-specific risk be diversified away by investing in both US Treasury and Pacer Small 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 US Treasury and Pacer Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Treasury 12 and Pacer Small Cap, you can compare the effects of market volatilities on US Treasury and Pacer Small 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 US Treasury with a short position of Pacer Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and Pacer Small.
Diversification Opportunities for US Treasury and Pacer Small
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between OBIL and Pacer is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 12 and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and US Treasury 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 US Treasury 12 are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of US Treasury i.e., US Treasury and Pacer Small go up and down completely randomly.
Pair Corralation between US Treasury and Pacer Small
Given the investment horizon of 90 days US Treasury 12 is expected to generate 0.02 times more return on investment than Pacer Small. However, US Treasury 12 is 46.32 times less risky than Pacer Small. It trades about 0.6 of its potential returns per unit of risk. Pacer Small Cap is currently generating about -0.13 per unit of risk. If you would invest 4,988 in US Treasury 12 on November 9, 2024 and sell it today you would earn a total of 14.00 from holding US Treasury 12 or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Treasury 12 vs. Pacer Small Cap
Performance |
| Timeline |
| US Treasury 12 |
| Pacer Small Cap |
US Treasury and Pacer Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Treasury and Pacer Small
The main advantage of trading using opposite US Treasury and Pacer Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Treasury position performs unexpectedly, Pacer Small 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 Small will offset losses from the drop in Pacer Small's long position.| US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. Rbb Fund | US Treasury vs. US Treasury 6 |
| Pacer Small vs. Pacer Cash Cows | Pacer Small vs. Pacer Global Cash | Pacer Small vs. Pacer Developed Markets | Pacer Small vs. Invesco SP SmallCap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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