Correlation Between Pacer Small and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Pacer Small and SPDR SSGA 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 SPDR SSGA 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 SPDR SSGA Small, you can compare the effects of market volatilities on Pacer Small and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Small and SPDR SSGA.
Diversification Opportunities for Pacer Small and SPDR SSGA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and SPDR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Small Cap and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Small 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Small has no effect on the direction of Pacer Small i.e., Pacer Small and SPDR SSGA go up and down completely randomly.
Pair Corralation between Pacer Small and SPDR SSGA
Given the investment horizon of 90 days Pacer Small Cap is expected to generate 0.91 times more return on investment than SPDR SSGA. However, Pacer Small Cap is 1.1 times less risky than SPDR SSGA. It trades about 0.18 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about 0.12 per unit of risk. If you would invest 3,835 in Pacer Small Cap on June 1, 2025 and sell it today you would earn a total of 496.00 from holding Pacer Small Cap or generate 12.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Small Cap vs. SPDR SSGA Small
Performance |
| Timeline |
| Pacer Small Cap |
| SPDR SSGA Small |
Pacer Small and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Small and SPDR SSGA
The main advantage of trading using opposite Pacer Small and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Small position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA'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 |
| SPDR SSGA vs. SPDR SSGA Large | SPDR SSGA vs. Invesco SP SmallCap | SPDR SSGA vs. Invesco SP MidCap | SPDR SSGA vs. SPDR MSCI EAFE |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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