Correlation Between IShares Russell and Pacer Trendpilot

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

By analyzing existing cross correlation between iShares Russell 1000 and Pacer Trendpilot 100, you can compare the effects of market volatilities on IShares Russell and Pacer Trendpilot 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 Russell with a short position of Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Pacer Trendpilot.

Diversification Opportunities for IShares Russell and Pacer Trendpilot

0.98

Correlation Coefficient

IShares Russell  Pacer Trendpilot

Almost no diversification

The 3 months correlation between IShares and Pacer is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and Pacer Trendpilot 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot 100 and IShares Russell 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 Russell 1000 are associated (or correlated) with Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot 100 has no effect on the direction of IShares Russell i.e., IShares Russell and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between IShares Russell and Pacer Trendpilot

Considering the 90-day investment horizon iShares Russell 1000 is expected to under-perform the Pacer Trendpilot. In addition to that, IShares Russell is 1.75 times more volatile than Pacer Trendpilot 100. It trades about -0.1 of its total potential returns per unit of risk. Pacer Trendpilot 100 is currently generating about -0.07 per unit of volatility. If you would invest  7,454  in Pacer Trendpilot 100 on December 28, 2024 and sell it today you would lose (255.00) from holding Pacer Trendpilot 100 or give up 3.42% of portfolio value over 90 days.

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

iShares Russell 1000  vs.  Pacer Trendpilot 100

iShares Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pacer Trendpilot 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Trendpilot 100 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pacer Trendpilot is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Russell and Pacer Trendpilot

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

The idea behind iShares Russell 1000 and Pacer Trendpilot 100 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.