Correlation Between Northern Lights and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Northern Lights and Pacer Funds 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 Northern Lights and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Pacer Funds Trust, you can compare the effects of market volatilities on Northern Lights and Pacer Funds 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 Northern Lights with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Pacer Funds.
Diversification Opportunities for Northern Lights and Pacer Funds
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Pacer is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust and Northern Lights 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 Northern Lights are associated (or correlated) with Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Northern Lights i.e., Northern Lights and Pacer Funds go up and down completely randomly.
Pair Corralation between Northern Lights and Pacer Funds
Given the investment horizon of 90 days Northern Lights is expected to under-perform the Pacer Funds. But the etf apears to be less risky and, when comparing its historical volatility, Northern Lights is 1.11 times less risky than Pacer Funds. The etf trades about -0.04 of its potential returns per unit of risk. The Pacer Funds Trust is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,248 in Pacer Funds Trust on September 4, 2025 and sell it today you would lose (1.00) from holding Pacer Funds Trust or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Pacer Funds Trust
Performance |
| Timeline |
| Northern Lights |
| Pacer Funds Trust |
Northern Lights and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Pacer Funds
The main advantage of trading using opposite Northern Lights and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights position performs unexpectedly, Pacer Funds 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 Funds will offset losses from the drop in Pacer Funds' long position.| Northern Lights vs. Vanguard Growth Index | Northern Lights vs. iShares Russell 1000 | Northern Lights vs. SPDR Portfolio SP | Northern Lights vs. Vanguard Mega Cap |
| Pacer Funds vs. FT Vest Equity | Pacer Funds vs. Northern Lights | Pacer Funds vs. Diamond Hill Funds | Pacer Funds vs. Dimensional International High |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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