Correlation Between Vanguard Minimum and Pacer Lunt

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

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

Diversification Opportunities for Vanguard Minimum and Pacer Lunt

0.97

Correlation Coefficient

Vanguard Minimum  Pacer Lunt

Almost no diversification

The 3 months correlation between Vanguard and Pacer is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Minimum Volatility and Pacer Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap and Vanguard Minimum 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 Vanguard Minimum Volatility are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of Vanguard Minimum i.e., Vanguard Minimum and Pacer Lunt go up and down completely randomly.

Pair Corralation between Vanguard Minimum and Pacer Lunt

Given the investment horizon of 90 days Vanguard Minimum Volatility is expected to generate 0.59 times more return on investment than Pacer Lunt. However, Vanguard Minimum Volatility is 1.71 times less risky than Pacer Lunt. It trades about -0.28 of its potential returns per unit of risk. Pacer Lunt MidCap is currently generating about -0.21 per unit of risk. If you would invest  12,585  in Vanguard Minimum Volatility on October 7, 2024 and sell it today you would lose (454.00) from holding Vanguard Minimum Volatility or give up 3.61% of portfolio value over 90 days.

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

Vanguard Minimum Volatility  vs.  Pacer Lunt MidCap

Vanguard Minimum Vol

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Minimum Volatility are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, Vanguard Minimum is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pacer Lunt MidCap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Lunt MidCap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Pacer Lunt is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Minimum and Pacer Lunt

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

The idea behind Vanguard Minimum Volatility and Pacer Lunt MidCap 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.