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 Internet, 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

0.38

Correlation Coefficient

Pacer Benchmark  Global X

Weak diversification

The 3 months correlation between Pacer and Global is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Benchmark Data and Global X Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Internet 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 Internet 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 Data is expected to generate 0.94 times more return on investment than Global X. However, Pacer Benchmark Data is 1.06 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X Internet is currently generating about -0.03 per unit of risk. If you would invest  2,972  in Pacer Benchmark Data on December 28, 2024 and sell it today you would lose (14.00) from holding Pacer Benchmark Data or give up 0.47% of portfolio value over 90 days.

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

Pacer Benchmark Data  vs.  Global X Internet

Pacer Benchmark Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Benchmark Data has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pacer Benchmark is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Global X Internet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Internet has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Global X is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

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 Internet 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.