Correlation Between Pacer Nasdaq and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Pacer Nasdaq and IShares ESG 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 Pacer Nasdaq and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Nasdaq International and iShares ESG Aggregate, you can compare the effects of market volatilities on Pacer Nasdaq and IShares ESG 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 Pacer Nasdaq with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Nasdaq and IShares ESG.
Diversification Opportunities for Pacer Nasdaq and IShares ESG
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacer and IShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Nasdaq International and iShares ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aggregate and Pacer Nasdaq 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 Pacer Nasdaq International are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aggregate has no effect on the direction of Pacer Nasdaq i.e., Pacer Nasdaq and IShares ESG go up and down completely randomly.
Pair Corralation between Pacer Nasdaq and IShares ESG
Given the investment horizon of 90 days Pacer Nasdaq International is expected to under-perform the IShares ESG. In addition to that, Pacer Nasdaq is 2.64 times more volatile than iShares ESG Aggregate. It trades about -0.11 of its total potential returns per unit of risk. iShares ESG Aggregate is currently generating about 0.19 per unit of volatility. If you would invest 4,685 in iShares ESG Aggregate on September 2, 2024 and sell it today you would earn a total of 71.00 from holding iShares ESG Aggregate or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Nasdaq International vs. iShares ESG Aggregate
Performance |
| Timeline |
| Pacer Nasdaq Interna |
| iShares ESG Aggregate |
Pacer Nasdaq and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Nasdaq and IShares ESG
The main advantage of trading using opposite Pacer Nasdaq and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Nasdaq position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| Pacer Nasdaq vs. Invesco Actively Managed | Pacer Nasdaq vs. iShares Trust | Pacer Nasdaq vs. Xtrackers MSCI Emerging | Pacer Nasdaq vs. iShares MSCI Emerging |
| IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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