Correlation Between Vanguard Extended and Pacer Lunt
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Pacer Lunt 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 Extended and Pacer Lunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Pacer Lunt MidCap, you can compare the effects of market volatilities on Vanguard Extended and Pacer Lunt 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 Extended with a short position of Pacer Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Pacer Lunt.
Diversification Opportunities for Vanguard Extended and Pacer Lunt
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Pacer is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Pacer Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap and Vanguard Extended 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 Extended Market are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Pacer Lunt go up and down completely randomly.
Pair Corralation between Vanguard Extended and Pacer Lunt
Considering the 90-day investment horizon Vanguard Extended is expected to generate 1.06 times less return on investment than Pacer Lunt. In addition to that, Vanguard Extended is 1.08 times more volatile than Pacer Lunt MidCap. It trades about 0.08 of its total potential returns per unit of risk. Pacer Lunt MidCap is currently generating about 0.09 per unit of volatility. If you would invest 3,166 in Pacer Lunt MidCap on August 28, 2024 and sell it today you would earn a total of 1,903 from holding Pacer Lunt MidCap or generate 60.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Pacer Lunt MidCap
Performance |
| Timeline |
| Vanguard Extended Market |
| Pacer Lunt MidCap |
Vanguard Extended and Pacer Lunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Pacer Lunt
The main advantage of trading using opposite Vanguard Extended and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Pacer Lunt 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 Lunt will offset losses from the drop in Pacer Lunt's long position.| Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. iShares Core SP | Vanguard Extended vs. SPDR SP MIDCAP | Vanguard Extended vs. First Trust Dorsey |
| Pacer Lunt vs. Vanguard Mid Cap Index | Pacer Lunt vs. iShares Core SP | Pacer Lunt vs. SPDR SP MIDCAP | Pacer Lunt vs. First Trust Dorsey |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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