Correlation Between Pacer Trendpilot and Pacer CFRA
Can any of the company-specific risk be diversified away by investing in both Pacer Trendpilot and Pacer CFRA 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 CFRA 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 CFRA Stovall Equal, you can compare the effects of market volatilities on Pacer Trendpilot and Pacer CFRA 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 CFRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Trendpilot and Pacer CFRA.
Diversification Opportunities for Pacer Trendpilot and Pacer CFRA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacer and Pacer is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot 100 and Pacer CFRA Stovall Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer CFRA Stovall 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 CFRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer CFRA Stovall has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and Pacer CFRA go up and down completely randomly.
Pair Corralation between Pacer Trendpilot and Pacer CFRA
Given the investment horizon of 90 days Pacer Trendpilot 100 is expected to generate 0.86 times more return on investment than Pacer CFRA. However, Pacer Trendpilot 100 is 1.16 times less risky than Pacer CFRA. It trades about 0.12 of its potential returns per unit of risk. Pacer CFRA Stovall Equal is currently generating about 0.03 per unit of risk. If you would invest 5,030 in Pacer Trendpilot 100 on September 3, 2024 and sell it today you would earn a total of 2,504 from holding Pacer Trendpilot 100 or generate 49.78% 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. Pacer CFRA Stovall Equal
Performance |
| Timeline |
| Pacer Trendpilot 100 |
| Pacer CFRA Stovall |
Pacer Trendpilot and Pacer CFRA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Trendpilot and Pacer CFRA
The main advantage of trading using opposite Pacer Trendpilot and Pacer CFRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Trendpilot position performs unexpectedly, Pacer CFRA 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 CFRA will offset losses from the drop in Pacer CFRA'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 CFRA vs. Pacer Trendpilot Large | Pacer CFRA vs. Pacer Trendpilot Mid | Pacer CFRA vs. Pacer Trendpilot 100 | Pacer CFRA vs. Pacer Trendpilot European |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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