Correlation Between ProShares and Pacer Trendpilot
Can any of the company-specific risk be diversified away by investing in both ProShares and Pacer Trendpilot 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 ProShares and Pacer Trendpilot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP MidCap and Pacer Trendpilot Mid, you can compare the effects of market volatilities on ProShares and Pacer Trendpilot 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 ProShares with a short position of Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Pacer Trendpilot.
Diversification Opportunities for ProShares and Pacer Trendpilot
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and Pacer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and Pacer Trendpilot Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot Mid and ProShares 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 ProShares SP MidCap are associated (or correlated) with Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot Mid has no effect on the direction of ProShares i.e., ProShares and Pacer Trendpilot go up and down completely randomly.
Pair Corralation between ProShares and Pacer Trendpilot
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 0.85 times more return on investment than Pacer Trendpilot. However, ProShares SP MidCap is 1.17 times less risky than Pacer Trendpilot. It trades about -0.11 of its potential returns per unit of risk. Pacer Trendpilot Mid is currently generating about -0.18 per unit of risk. If you would invest 8,370 in ProShares SP MidCap on November 28, 2024 and sell it today you would lose (152.00) from holding ProShares SP MidCap or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. Pacer Trendpilot Mid
Performance |
| Timeline |
| ProShares SP MidCap |
| Pacer Trendpilot Mid |
ProShares and Pacer Trendpilot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Pacer Trendpilot
The main advantage of trading using opposite ProShares and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Pacer Trendpilot 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 Trendpilot will offset losses from the drop in Pacer Trendpilot's long position.| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
| Pacer Trendpilot vs. Pacer Trendpilot Large | Pacer Trendpilot vs. Pacer Trendpilot 100 | Pacer Trendpilot vs. Pacer Trendpilot European | Pacer Trendpilot vs. Pacer Trendpilot International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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