Correlation Between Pacer Small and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Pacer Small and WisdomTree Emerging 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 Small and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Small Cap and WisdomTree Emerging Markets, you can compare the effects of market volatilities on Pacer Small and WisdomTree Emerging 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 Small with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Small and WisdomTree Emerging.
Diversification Opportunities for Pacer Small and WisdomTree Emerging
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pacer and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Small Cap and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and Pacer Small 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 Small Cap are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Pacer Small i.e., Pacer Small and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Pacer Small and WisdomTree Emerging
Given the investment horizon of 90 days Pacer Small Cap is expected to generate 1.45 times more return on investment than WisdomTree Emerging. However, Pacer Small is 1.45 times more volatile than WisdomTree Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.21 per unit of risk. If you would invest 3,897 in Pacer Small Cap on May 27, 2025 and sell it today you would earn a total of 442.00 from holding Pacer Small Cap or generate 11.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pacer Small Cap vs. WisdomTree Emerging Markets
Performance |
Timeline |
Pacer Small Cap |
WisdomTree Emerging |
Pacer Small and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacer Small and WisdomTree Emerging
The main advantage of trading using opposite Pacer Small and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Small position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.Pacer Small vs. Pacer Cash Cows | Pacer Small vs. Pacer Global Cash | Pacer Small vs. Pacer Developed Markets | Pacer Small vs. Invesco SP SmallCap |
WisdomTree Emerging vs. WisdomTree China ex State Owned | WisdomTree Emerging vs. iShares ESG Aware | WisdomTree Emerging vs. SPDR Portfolio Emerging | WisdomTree Emerging vs. WisdomTree International Hedged |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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