Correlation Between Vanguard Small and Pacer Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Pacer Small 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 Vanguard Small and Pacer Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Pacer Small Cap, you can compare the effects of market volatilities on Vanguard Small and Pacer Small 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 Vanguard Small with a short position of Pacer Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Pacer Small.
Diversification Opportunities for Vanguard Small and Pacer Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Pacer is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and Vanguard Small 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 Vanguard Small Cap Growth are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of Vanguard Small i.e., Vanguard Small and Pacer Small go up and down completely randomly.
Pair Corralation between Vanguard Small and Pacer Small
Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 0.89 times more return on investment than Pacer Small. However, Vanguard Small Cap Growth is 1.12 times less risky than Pacer Small. It trades about 0.12 of its potential returns per unit of risk. Pacer Small Cap is currently generating about 0.08 per unit of risk. If you would invest 25,186 in Vanguard Small Cap Growth on August 26, 2024 and sell it today you would earn a total of 4,599 from holding Vanguard Small Cap Growth or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Pacer Small Cap
Performance |
| Timeline |
| Vanguard Small Cap |
| Pacer Small Cap |
Vanguard Small and Pacer Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Pacer Small
The main advantage of trading using opposite Vanguard Small and Pacer Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Pacer Small 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 Small will offset losses from the drop in Pacer Small's long position.| Vanguard Small vs. Vanguard Mid Cap Growth | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Growth Index |
| Pacer Small vs. Pacer Large Cap | Pacer Small vs. VanEck Robotics ETF | Pacer Small vs. Pacer Small Cap | Pacer Small vs. Pacer Cash Cows |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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