Correlation Between Roundhill Magnificent and Pacer Trendpilot

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

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

Diversification Opportunities for Roundhill Magnificent and Pacer Trendpilot

-0.45

Correlation Coefficient

Roundhill Magnificent  Pacer Trendpilot

Very good diversification

The 3 months correlation between Roundhill and Pacer is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Magnificent Seven and Pacer Trendpilot International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot Int and Roundhill Magnificent 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 Roundhill Magnificent Seven 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 Int has no effect on the direction of Roundhill Magnificent i.e., Roundhill Magnificent and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between Roundhill Magnificent and Pacer Trendpilot

Given the investment horizon of 90 days Roundhill Magnificent Seven is expected to under-perform the Pacer Trendpilot. In addition to that, Roundhill Magnificent is 2.32 times more volatile than Pacer Trendpilot International. It trades about -0.14 of its total potential returns per unit of risk. Pacer Trendpilot International is currently generating about 0.14 per unit of volatility. If you would invest  2,783  in Pacer Trendpilot International on December 29, 2024 and sell it today you would earn a total of  204.00  from holding Pacer Trendpilot International or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Roundhill Magnificent Seven  vs.  Pacer Trendpilot International

Roundhill Magnificent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roundhill Magnificent Seven has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pacer Trendpilot Int

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Trendpilot International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Pacer Trendpilot may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Roundhill Magnificent and Pacer Trendpilot

The main advantage of trading using opposite Roundhill Magnificent and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Magnificent 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 Roundhill Magnificent Seven and Pacer Trendpilot International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.