Correlation Between Pacer Cash and Vident Core

Can any of the company-specific risk be diversified away by investing in both Pacer Cash and Vident Core 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 Cash and Vident Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacer Cash Cows and Vident Core Equity, you can compare the effects of market volatilities on Pacer Cash and Vident Core 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 Cash with a short position of Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and Vident Core.

Diversification Opportunities for Pacer Cash and Vident Core

0.85

Correlation Coefficient

Pacer Cash  Vident Core

Very poor diversification

The 3 months correlation between Pacer and Vident is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Vident Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Equity and Pacer Cash 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 Cash Cows are associated (or correlated) with Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Equity has no effect on the direction of Pacer Cash i.e., Pacer Cash and Vident Core go up and down completely randomly.

Pair Corralation between Pacer Cash and Vident Core

Given the investment horizon of 90 days Pacer Cash is expected to generate 1.78 times less return on investment than Vident Core. But when comparing it to its historical volatility, Pacer Cash Cows is 1.01 times less risky than Vident Core. It trades about 0.1 of its potential returns per unit of risk. Vident Core Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,595  in Vident Core Equity on August 30, 2024 and sell it today you would earn a total of  544.00  from holding Vident Core Equity or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Pacer Cash Cows  vs.  Vident Core Equity

Pacer Cash Cows

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Cash Cows are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vident Core Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vident Core Equity are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Vident Core may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Pacer Cash and Vident Core

The main advantage of trading using opposite Pacer Cash and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core's long position.

The idea behind Pacer Cash Cows and Vident Core Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..