Correlation Between Pacer Financial and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Pacer Financial and SSgA SPDR 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 Financial and SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Financial and SSgA SPDR ETFs, you can compare the effects of market volatilities on Pacer Financial and SSgA SPDR 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 Financial with a short position of SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Financial and SSgA SPDR.
Diversification Opportunities for Pacer Financial and SSgA SPDR
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pacer and SSgA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Financial and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Pacer Financial 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 Financial are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Pacer Financial i.e., Pacer Financial and SSgA SPDR go up and down completely randomly.
Pair Corralation between Pacer Financial and SSgA SPDR
Given the investment horizon of 90 days Pacer Financial is expected to generate 0.51 times more return on investment than SSgA SPDR. However, Pacer Financial is 1.98 times less risky than SSgA SPDR. It trades about 0.11 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.02 per unit of risk. If you would invest 2,793 in Pacer Financial on September 30, 2024 and sell it today you would earn a total of 1,210 from holding Pacer Financial or generate 43.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 96.31% |
Values | Daily Returns |
Pacer Financial vs. SSgA SPDR ETFs
Performance |
Timeline |
Pacer Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
SSgA SPDR ETFs |
Pacer Financial and SSgA SPDR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacer Financial and SSgA SPDR
The main advantage of trading using opposite Pacer Financial and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Financial position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.The idea behind Pacer Financial and SSgA SPDR ETFs 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.SSgA SPDR vs. Vanguard Total Stock | SSgA SPDR vs. SPDR SP 500 | SSgA SPDR vs. iShares Core SP | SSgA SPDR vs. Vanguard Total Bond |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |