Correlation Between Pacer CFRA and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Pacer CFRA and Vanguard Total 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 CFRA and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer CFRA Stovall Equal and Vanguard Total Stock, you can compare the effects of market volatilities on Pacer CFRA and Vanguard Total 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 CFRA with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer CFRA and Vanguard Total.
Diversification Opportunities for Pacer CFRA and Vanguard Total
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacer and Vanguard is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pacer CFRA Stovall Equal and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Pacer CFRA 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 CFRA Stovall Equal are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Pacer CFRA i.e., Pacer CFRA and Vanguard Total go up and down completely randomly.
Pair Corralation between Pacer CFRA and Vanguard Total
Given the investment horizon of 90 days Pacer CFRA is expected to generate 3.92 times less return on investment than Vanguard Total. In addition to that, Pacer CFRA is 1.01 times more volatile than Vanguard Total Stock. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.11 per unit of volatility. If you would invest 19,494 in Vanguard Total Stock on September 3, 2024 and sell it today you would earn a total of 10,492 from holding Vanguard Total Stock or generate 53.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer CFRA Stovall Equal vs. Vanguard Total Stock
Performance |
| Timeline |
| Pacer CFRA Stovall |
| Vanguard Total Stock |
Pacer CFRA and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer CFRA and Vanguard Total
The main advantage of trading using opposite Pacer CFRA and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer CFRA position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Pacer CFRA vs. Pacer Trendpilot Large | Pacer CFRA vs. Pacer Trendpilot Mid | Pacer CFRA vs. Pacer Trendpilot 100 | Pacer CFRA vs. Pacer Trendpilot European |
| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
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 Directory module to find actively traded commodities issued by global exchanges.
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