Correlation Between Pacer Small and JPMorgan Nasdaq

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

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

Diversification Opportunities for Pacer Small and JPMorgan Nasdaq

0.79

Correlation Coefficient

Pacer Small  JPMorgan Nasdaq

Poor diversification

The 3 months correlation between Pacer and JPMorgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Small Cap and JPMorgan Nasdaq Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Nasdaq Equity and Pacer Small 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 Small Cap are associated (or correlated) with JPMorgan Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Nasdaq Equity has no effect on the direction of Pacer Small i.e., Pacer Small and JPMorgan Nasdaq go up and down completely randomly.

Pair Corralation between Pacer Small and JPMorgan Nasdaq

Given the investment horizon of 90 days Pacer Small Cap is expected to under-perform the JPMorgan Nasdaq. But the etf apears to be less risky and, when comparing its historical volatility, Pacer Small Cap is 1.03 times less risky than JPMorgan Nasdaq. The etf trades about -0.22 of its potential returns per unit of risk. The JPMorgan Nasdaq Equity is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  5,584  in JPMorgan Nasdaq Equity on December 29, 2024 and sell it today you would lose (403.00) from holding JPMorgan Nasdaq Equity or give up 7.22% of portfolio value over 90 days.

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

Pacer Small Cap  vs.  JPMorgan Nasdaq Equity

Pacer Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Nasdaq Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Pacer Small and JPMorgan Nasdaq

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

The idea behind Pacer Small Cap and JPMorgan Nasdaq 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.