Correlation Between Pacer Benchmark and Global X

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

By analyzing existing cross correlation between Pacer Benchmark Data and Global X Cloud, you can compare the effects of market volatilities on Pacer Benchmark and Global X 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 Benchmark with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Benchmark and Global X.

Diversification Opportunities for Pacer Benchmark and Global X

-0.05

Correlation Coefficient

Pacer Benchmark  Global X

Good diversification

The 3 months correlation between Pacer and Global is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Benchmark Data and Global X Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cloud and Pacer Benchmark 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 Benchmark Data are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Cloud has no effect on the direction of Pacer Benchmark i.e., Pacer Benchmark and Global X go up and down completely randomly.

Pair Corralation between Pacer Benchmark and Global X

Given the investment horizon of 90 days Pacer Benchmark is expected to generate 3.48 times less return on investment than Global X. But when comparing it to its historical volatility, Pacer Benchmark Data is 1.3 times less risky than Global X. It trades about 0.11 of its potential returns per unit of risk. Global X Cloud is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,961  in Global X Cloud on September 3, 2024 and sell it today you would earn a total of  502.00  from holding Global X Cloud or generate 25.6% return on investment over 90 days.

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

Pacer Benchmark Data  vs.  Global X Cloud

Pacer Benchmark Data

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Benchmark Data are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Pacer Benchmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Cloud

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cloud are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacer Benchmark and Global X

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

The idea behind Pacer Benchmark Data and Global X Cloud 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.