Correlation Between Pacer CFRA and Natixis ETF

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

By analyzing existing cross correlation between Pacer CFRA Stovall Equal and Natixis ETF Trust, you can compare the effects of market volatilities on Pacer CFRA and Natixis ETF 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 CFRA with a short position of Natixis ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer CFRA and Natixis ETF.

Diversification Opportunities for Pacer CFRA and Natixis ETF

0.98

Correlation Coefficient

Pacer CFRA  Natixis ETF

Almost no diversification

The 3 months correlation between Pacer and Natixis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pacer CFRA Stovall Equal and Natixis ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis ETF Trust and Pacer CFRA 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 CFRA Stovall Equal are associated (or correlated) with Natixis ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis ETF Trust has no effect on the direction of Pacer CFRA i.e., Pacer CFRA and Natixis ETF go up and down completely randomly.

Pair Corralation between Pacer CFRA and Natixis ETF

Given the investment horizon of 90 days Pacer CFRA Stovall Equal is expected to under-perform the Natixis ETF. But the etf apears to be less risky and, when comparing its historical volatility, Pacer CFRA Stovall Equal is 1.1 times less risky than Natixis ETF. The etf trades about -0.26 of its potential returns per unit of risk. The Natixis ETF Trust is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  3,639  in Natixis ETF Trust on January 31, 2024 and sell it today you would lose (137.00) from holding Natixis ETF Trust or give up 3.76% of portfolio value over 90 days.

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

Pacer CFRA Stovall Equal  vs.  Natixis ETF Trust

Pacer CFRA Stovall

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer CFRA Stovall Equal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pacer CFRA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Natixis ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natixis ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Natixis ETF may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Pacer CFRA and Natixis ETF

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

The idea behind Pacer CFRA Stovall Equal and Natixis ETF Trust 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..