Correlation Between VanEck Vectors and Pacer Cash

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

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

Diversification Opportunities for VanEck Vectors and Pacer Cash

-0.02

Correlation Coefficient

VanEck Vectors  Pacer Cash

Good diversification

The 3 months correlation between VanEck and Pacer is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Vectors ETF and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and VanEck Vectors 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 VanEck Vectors ETF are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of VanEck Vectors i.e., VanEck Vectors and Pacer Cash go up and down completely randomly.

Pair Corralation between VanEck Vectors and Pacer Cash

Considering the 90-day investment horizon VanEck Vectors is expected to generate 16.98 times less return on investment than Pacer Cash. But when comparing it to its historical volatility, VanEck Vectors ETF is 3.27 times less risky than Pacer Cash. It trades about 0.05 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,307  in Pacer Cash Cows on September 5, 2024 and sell it today you would earn a total of  682.00  from holding Pacer Cash Cows or generate 15.83% return on investment over 90 days.

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

VanEck Vectors ETF  vs.  Pacer Cash Cows

VanEck Vectors ETF

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pacer Cash Cows

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Cash Cows are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Pacer Cash disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Vectors and Pacer Cash

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

The idea behind VanEck Vectors ETF and Pacer Cash Cows 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 Transaction History module to view history of all your transactions and understand their impact on performance.