Correlation Between Pacer Large and VanEck Robotics

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

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

Diversification Opportunities for Pacer Large and VanEck Robotics

0.82

Correlation Coefficient

Pacer Large  VanEck Robotics

Very poor diversification

The 3 months correlation between Pacer and VanEck is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Large Cap and VanEck Robotics ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Robotics ETF and Pacer Large 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 Large Cap are associated (or correlated) with VanEck Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Robotics ETF has no effect on the direction of Pacer Large i.e., Pacer Large and VanEck Robotics go up and down completely randomly.

Pair Corralation between Pacer Large and VanEck Robotics

Given the investment horizon of 90 days Pacer Large Cap is expected to under-perform the VanEck Robotics. In addition to that, Pacer Large is 1.11 times more volatile than VanEck Robotics ETF. It trades about -0.03 of its total potential returns per unit of risk. VanEck Robotics ETF is currently generating about 0.0 per unit of volatility. If you would invest  4,163  in VanEck Robotics ETF on December 27, 2024 and sell it today you would lose (32.00) from holding VanEck Robotics ETF or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Pacer Large Cap  vs.  VanEck Robotics ETF

Pacer Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pacer Large is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

VanEck Robotics ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Robotics ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Robotics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pacer Large and VanEck Robotics

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

The idea behind Pacer Large Cap and VanEck Robotics ETF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.