Correlation Between IShares Core and Pacer Export

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

By analyzing existing cross correlation between iShares Core SP and Pacer Export Leaders, you can compare the effects of market volatilities on IShares Core and Pacer Export 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 IShares Core with a short position of Pacer Export. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Pacer Export.

Diversification Opportunities for IShares Core and Pacer Export

0.65

Correlation Coefficient

IShares Core  Pacer Export

Poor diversification

The 3 months correlation between IShares and Pacer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Pacer Export Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Export Leaders and IShares Core 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 iShares Core SP are associated (or correlated) with Pacer Export. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Export Leaders has no effect on the direction of IShares Core i.e., IShares Core and Pacer Export go up and down completely randomly.

Pair Corralation between IShares Core and Pacer Export

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the Pacer Export. In addition to that, IShares Core is 1.04 times more volatile than Pacer Export Leaders. It trades about -0.24 of its total potential returns per unit of risk. Pacer Export Leaders is currently generating about -0.15 per unit of volatility. If you would invest  5,064  in Pacer Export Leaders on October 12, 2024 and sell it today you would lose (157.00) from holding Pacer Export Leaders or give up 3.1% of portfolio value over 90 days.

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

iShares Core SP  vs.  Pacer Export Leaders

iShares Core SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pacer Export Leaders

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Core and Pacer Export

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

The idea behind iShares Core SP and Pacer Export Leaders 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.