Correlation Between Pacer Trendpilot and Vanguard Core

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

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

Diversification Opportunities for Pacer Trendpilot and Vanguard Core

0.71

Correlation Coefficient

Pacer Trendpilot  Vanguard Core

Poor diversification

The 3 months correlation between Pacer and Vanguard is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot Bond and Vanguard Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Core Bond and Pacer Trendpilot 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 Trendpilot Bond are associated (or correlated) with Vanguard Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Core Bond has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and Vanguard Core go up and down completely randomly.

Pair Corralation between Pacer Trendpilot and Vanguard Core

Given the investment horizon of 90 days Pacer Trendpilot Bond is expected to generate 0.97 times more return on investment than Vanguard Core. However, Pacer Trendpilot Bond is 1.03 times less risky than Vanguard Core. It trades about 0.08 of its potential returns per unit of risk. Vanguard Core Bond is currently generating about 0.07 per unit of risk. If you would invest  1,918  in Pacer Trendpilot Bond on December 4, 2024 and sell it today you would earn a total of  114.00  from holding Pacer Trendpilot Bond or generate 5.94% return on investment over 90 days.

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

Pacer Trendpilot Bond  vs.  Vanguard Core Bond

Pacer Trendpilot Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Trendpilot Bond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Pacer Trendpilot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Core Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Core Bond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vanguard Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Trendpilot and Vanguard Core

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

The idea behind Pacer Trendpilot Bond and Vanguard Core Bond 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.