Correlation Between Vanguard FTSE and Pacer Lunt

Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 FTSE 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 FTSE Pacific and Pacer Lunt Large, you can compare the effects of market volatilities on Vanguard FTSE 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 FTSE with a short position of Pacer Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Pacer Lunt.

Diversification Opportunities for Vanguard FTSE and Pacer Lunt

-0.44

Correlation Coefficient

Vanguard FTSE  Pacer Lunt

Very good diversification

The 3 months correlation between Vanguard and Pacer is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Pacific and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large and Vanguard FTSE 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 FTSE Pacific 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 Large has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Pacer Lunt go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Pacer Lunt

Considering the 90-day investment horizon Vanguard FTSE Pacific is expected to under-perform the Pacer Lunt. In addition to that, Vanguard FTSE is 1.73 times more volatile than Pacer Lunt Large. It trades about -0.06 of its total potential returns per unit of risk. Pacer Lunt Large is currently generating about 0.15 per unit of volatility. If you would invest  3,777  in Pacer Lunt Large on August 30, 2024 and sell it today you would earn a total of  205.00  from holding Pacer Lunt Large or generate 5.43% return on investment over 90 days.

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

Vanguard FTSE Pacific  vs.  Pacer Lunt Large

Vanguard FTSE Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard FTSE Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pacer Lunt Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Lunt Large are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pacer Lunt is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vanguard FTSE and Pacer Lunt

The main advantage of trading using opposite Vanguard FTSE and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.

The idea behind Vanguard FTSE Pacific and Pacer Lunt Large 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.