Correlation Between Pacer Export and ProShares

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

By analyzing existing cross correlation between Pacer Export Leaders and ProShares SP 500, you can compare the effects of market volatilities on Pacer Export and ProShares 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 Export with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Export and ProShares.

Diversification Opportunities for Pacer Export and ProShares

0.28

Correlation Coefficient

Pacer Export  ProShares

Modest diversification

The 3 months correlation between Pacer and ProShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Export Leaders and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and Pacer Export 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 Export Leaders are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Pacer Export i.e., Pacer Export and ProShares go up and down completely randomly.

Pair Corralation between Pacer Export and ProShares

Given the investment horizon of 90 days Pacer Export Leaders is expected to under-perform the ProShares. In addition to that, Pacer Export is 1.07 times more volatile than ProShares SP 500. It trades about -0.15 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about -0.14 per unit of volatility. If you would invest  6,515  in ProShares SP 500 on October 12, 2024 and sell it today you would lose (171.00) from holding ProShares SP 500 or give up 2.62% of portfolio value over 90 days.

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

Pacer Export Leaders  vs.  ProShares SP 500

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.

ProShares SP 500

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ProShares is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pacer Export and ProShares

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

The idea behind Pacer Export Leaders and ProShares SP 500 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 Global Correlations module to find global opportunities by holding instruments from different markets.