Correlation Between VanEck Robotics and Pacer Large

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

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

Diversification Opportunities for VanEck Robotics and Pacer Large

0.82

Correlation Coefficient

VanEck Robotics  Pacer Large

Very poor diversification

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

Pair Corralation between VanEck Robotics and Pacer Large

Given the investment horizon of 90 days VanEck Robotics ETF is expected to generate 0.9 times more return on investment than Pacer Large. However, VanEck Robotics ETF is 1.11 times less risky than Pacer Large. It trades about 0.0 of its potential returns per unit of risk. Pacer Large Cap is currently generating about -0.03 per unit of risk. 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

VanEck Robotics ETF  vs.  Pacer Large Cap

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.

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.

Pair Trading with VanEck Robotics and Pacer Large

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

The idea behind VanEck Robotics ETF and Pacer Large Cap 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.