Correlation Between Pacer Trendpilot and Pacer Global
Can any of the company-specific risk be diversified away by investing in both Pacer Trendpilot and Pacer Global 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 Pacer Global 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 Pacer Global Cash, you can compare the effects of market volatilities on Pacer Trendpilot and Pacer Global 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 Pacer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Trendpilot and Pacer Global.
Diversification Opportunities for Pacer Trendpilot and Pacer Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacer and Pacer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot 100 and Pacer Global Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Global Cash 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 Pacer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Global Cash has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and Pacer Global go up and down completely randomly.
Pair Corralation between Pacer Trendpilot and Pacer Global
Given the investment horizon of 90 days Pacer Trendpilot 100 is expected to generate 0.99 times more return on investment than Pacer Global. However, Pacer Trendpilot 100 is 1.01 times less risky than Pacer Global. It trades about 0.13 of its potential returns per unit of risk. Pacer Global Cash is currently generating about 0.04 per unit of risk. If you would invest 4,963 in Pacer Trendpilot 100 on September 3, 2024 and sell it today you would earn a total of 2,619 from holding Pacer Trendpilot 100 or generate 52.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Trendpilot 100 vs. Pacer Global Cash
Performance |
| Timeline |
| Pacer Trendpilot 100 |
| Pacer Global Cash |
Pacer Trendpilot and Pacer Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Trendpilot and Pacer Global
The main advantage of trading using opposite Pacer Trendpilot and Pacer Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Trendpilot position performs unexpectedly, Pacer Global 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 Global will offset losses from the drop in Pacer Global'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 |
| Pacer Global vs. Pacer Cash Cows | Pacer Global vs. Pacer Small Cap | Pacer Global vs. Pacer Developed Markets | Pacer Global vs. Pacer Trendpilot Large |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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