Correlation Between Real Estate and Pacer Benchmark

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

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

Diversification Opportunities for Real Estate and Pacer Benchmark

0.91

Correlation Coefficient

Real Estate  Pacer Benchmark

Almost no diversification

The 3 months correlation between Real and Pacer is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Real Estate and Pacer Benchmark Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Data and Real Estate 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 The Real Estate are associated (or correlated) with Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Data has no effect on the direction of Real Estate i.e., Real Estate and Pacer Benchmark go up and down completely randomly.

Pair Corralation between Real Estate and Pacer Benchmark

Given the investment horizon of 90 days The Real Estate is expected to under-perform the Pacer Benchmark. In addition to that, Real Estate is 1.07 times more volatile than Pacer Benchmark Data. It trades about -0.09 of its total potential returns per unit of risk. Pacer Benchmark Data is currently generating about -0.07 per unit of volatility. If you would invest  3,142  in Pacer Benchmark Data on October 10, 2024 and sell it today you would lose (152.00) from holding Pacer Benchmark Data or give up 4.84% of portfolio value over 90 days.

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

The Real Estate  vs.  Pacer Benchmark Data

Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Real Estate is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Benchmark Data

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Real Estate and Pacer Benchmark

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

The idea behind The Real Estate and Pacer Benchmark Data 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.