Correlation Between IShares Factors and Pacer Nasdaq
Can any of the company-specific risk be diversified away by investing in both IShares Factors and Pacer Nasdaq 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 IShares Factors and Pacer Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Factors Growth and Pacer Nasdaq 100, you can compare the effects of market volatilities on IShares Factors and Pacer Nasdaq 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 IShares Factors with a short position of Pacer Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Factors and Pacer Nasdaq.
Diversification Opportunities for IShares Factors and Pacer Nasdaq
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Pacer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Factors Growth and Pacer Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Nasdaq 100 and IShares Factors 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 iShares Factors Growth are associated (or correlated) with Pacer Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Nasdaq 100 has no effect on the direction of IShares Factors i.e., IShares Factors and Pacer Nasdaq go up and down completely randomly.
Pair Corralation between IShares Factors and Pacer Nasdaq
Given the investment horizon of 90 days iShares Factors Growth is expected to generate 0.97 times more return on investment than Pacer Nasdaq. However, iShares Factors Growth is 1.03 times less risky than Pacer Nasdaq. It trades about 0.17 of its potential returns per unit of risk. Pacer Nasdaq 100 is currently generating about 0.13 per unit of risk. If you would invest 5,175 in iShares Factors Growth on September 15, 2024 and sell it today you would earn a total of 559.00 from holding iShares Factors Growth or generate 10.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 90.77% |
Values | Daily Returns |
iShares Factors Growth vs. Pacer Nasdaq 100
Performance |
Timeline |
iShares Factors Growth |
Pacer Nasdaq 100 |
IShares Factors and Pacer Nasdaq Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Factors and Pacer Nasdaq
The main advantage of trading using opposite IShares Factors and Pacer Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Factors position performs unexpectedly, Pacer Nasdaq 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 Nasdaq will offset losses from the drop in Pacer Nasdaq's long position.IShares Factors vs. iShares ESG Advanced | ||
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Pacer Nasdaq vs. iShares Factors Growth | ||
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Pacer Nasdaq vs. iShares ESG Advanced | ||
Pacer Nasdaq vs. PIMCO RAFI Dynamic |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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