Correlation Between Pacer Benchmark and IShares US

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Can any of the company-specific risk be diversified away by investing in both Pacer Benchmark and IShares US 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 IShares US into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Benchmark Industrial and IShares US Real, you can compare the effects of market volatilities on Pacer Benchmark and IShares US 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 IShares US. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Benchmark and IShares US.

Diversification Opportunities for Pacer Benchmark and IShares US

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Pacer and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Benchmark Industrial and IShares US Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares US Real 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 Industrial are associated (or correlated) with IShares US. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares US Real has no effect on the direction of Pacer Benchmark i.e., Pacer Benchmark and IShares US go up and down completely randomly.

Pair Corralation between Pacer Benchmark and IShares US

If you would invest (100.00) in Pacer Benchmark Industrial on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Pacer Benchmark Industrial or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Pacer Benchmark Industrial  vs.  IShares US Real

 Performance 
       Timeline  
Pacer Benchmark Indu 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Pacer Benchmark Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Pacer Benchmark is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
IShares US Real 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days IShares US Real has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares US is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pacer Benchmark and IShares US Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pacer Benchmark and IShares US

The main advantage of trading using opposite Pacer Benchmark and IShares US positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Benchmark position performs unexpectedly, IShares US 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 IShares US will offset losses from the drop in IShares US's long position.
The idea behind Pacer Benchmark Industrial and IShares US Real 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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