Correlation Between IShares 1 and Pacer Trendpilot

Can any of the company-specific risk be diversified away by investing in both IShares 1 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 1 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 1 3 Year and Pacer Trendpilot Bond, you can compare the effects of market volatilities on IShares 1 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 1 with a short position of Pacer Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and Pacer Trendpilot.

Diversification Opportunities for IShares 1 and Pacer Trendpilot

0.87

Correlation Coefficient

IShares 1  Pacer Trendpilot

Very poor diversification

The 3 months correlation between IShares and Pacer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 3 Year and Pacer Trendpilot Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot Bond and IShares 1 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 1 3 Year 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 Bond has no effect on the direction of IShares 1 i.e., IShares 1 and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between IShares 1 and Pacer Trendpilot

Considering the 90-day investment horizon IShares 1 is expected to generate 1.93 times less return on investment than Pacer Trendpilot. But when comparing it to its historical volatility, iShares 1 3 Year is 2.9 times less risky than Pacer Trendpilot. It trades about 0.12 of its potential returns per unit of risk. Pacer Trendpilot Bond is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,759  in Pacer Trendpilot Bond on December 2, 2024 and sell it today you would earn a total of  273.00  from holding Pacer Trendpilot Bond or generate 15.52% return on investment over 90 days.

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

iShares 1 3 Year  vs.  Pacer Trendpilot Bond

iShares 1 3

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 3 Year are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with IShares 1 and Pacer Trendpilot

The main advantage of trading using opposite IShares 1 and Pacer Trendpilot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 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 1 3 Year and Pacer Trendpilot 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 Stocks Directory module to find actively traded stocks across global markets.