Correlation Between Virtus ETF and Pacer Pacific

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

By analyzing existing cross correlation between Virtus ETF Trust and Pacer Pacific Asset, you can compare the effects of market volatilities on Virtus ETF and Pacer Pacific 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 Virtus ETF with a short position of Pacer Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus ETF and Pacer Pacific.

Diversification Opportunities for Virtus ETF and Pacer Pacific

0.86

Correlation Coefficient

Virtus ETF  Pacer Pacific

Very poor diversification

The 3 months correlation between Virtus and Pacer is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset and Virtus ETF 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 Virtus ETF Trust are associated (or correlated) with Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of Virtus ETF i.e., Virtus ETF and Pacer Pacific go up and down completely randomly.

Pair Corralation between Virtus ETF and Pacer Pacific

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 0.91 times more return on investment than Pacer Pacific. However, Virtus ETF Trust is 1.1 times less risky than Pacer Pacific. It trades about 0.05 of its potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.01 per unit of risk. If you would invest  2,355  in Virtus ETF Trust on December 28, 2024 and sell it today you would earn a total of  7.00  from holding Virtus ETF Trust or generate 0.3% return on investment over 90 days.

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

Virtus ETF Trust  vs.  Pacer Pacific Asset

Virtus ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pacer Pacific Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Pacific Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pacer Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Virtus ETF and Pacer Pacific

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

The idea behind Virtus ETF Trust and Pacer Pacific Asset 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.