Correlation Between Pacer Funds and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Pacer Funds and Freedom Day 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 Funds and Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Funds Trust and Freedom Day Dividend, you can compare the effects of market volatilities on Pacer Funds and Freedom Day 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 Funds with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and Freedom Day.
Diversification Opportunities for Pacer Funds and Freedom Day
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacer and Freedom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and Pacer Funds 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 Funds Trust are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Pacer Funds i.e., Pacer Funds and Freedom Day go up and down completely randomly.
Pair Corralation between Pacer Funds and Freedom Day
Given the investment horizon of 90 days Pacer Funds Trust is expected to generate 1.5 times more return on investment than Freedom Day. However, Pacer Funds is 1.5 times more volatile than Freedom Day Dividend. It trades about 0.31 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.36 per unit of risk. If you would invest 4,696 in Pacer Funds Trust on September 1, 2024 and sell it today you would earn a total of 416.00 from holding Pacer Funds Trust or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pacer Funds Trust vs. Freedom Day Dividend
Performance |
| Timeline |
| Pacer Funds Trust |
| Freedom Day Dividend |
Pacer Funds and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and Freedom Day
The main advantage of trading using opposite Pacer Funds and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. iShares MSCI China | Pacer Funds vs. iShares Dividend and | Pacer Funds vs. SmartETFs Dividend Builder |
| Freedom Day vs. iShares Core SP | Freedom Day vs. iShares Core MSCI | Freedom Day vs. iShares Broad USD | Freedom Day vs. iShares Core SP |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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