Correlation Between Pacer Trendpilot and First Trust
Can any of the company-specific risk be diversified away by investing in both Pacer Trendpilot and First Trust 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 Trendpilot and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Trendpilot 100 and First Trust Emerging, you can compare the effects of market volatilities on Pacer Trendpilot and First Trust 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 Trendpilot with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Trendpilot and First Trust.
Diversification Opportunities for Pacer Trendpilot and First Trust
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacer and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot 100 and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging and Pacer Trendpilot 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 Trendpilot 100 are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Emerging has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and First Trust go up and down completely randomly.
Pair Corralation between Pacer Trendpilot and First Trust
Given the investment horizon of 90 days Pacer Trendpilot 100 is expected to generate 1.19 times more return on investment than First Trust. However, Pacer Trendpilot is 1.19 times more volatile than First Trust Emerging. It trades about 0.11 of its potential returns per unit of risk. First Trust Emerging is currently generating about -0.01 per unit of risk. If you would invest 7,188 in Pacer Trendpilot 100 on November 1, 2024 and sell it today you would earn a total of 323.00 from holding Pacer Trendpilot 100 or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Trendpilot 100 vs. First Trust Emerging
Performance |
| Timeline |
| Pacer Trendpilot 100 |
| First Trust Emerging |
Pacer Trendpilot and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Trendpilot and First Trust
The main advantage of trading using opposite Pacer Trendpilot and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Trendpilot position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot Mid | Pacer Trendpilot vs. Pacer Trendpilot European | Pacer Trendpilot vs. Nuveen ESG Large Cap |
| First Trust vs. First Trust SSI | First Trust vs. First Trust BuyWrite | First Trust vs. First Trust Managed | First Trust vs. First Trust Tactical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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