Correlation Between Pacer Financial and CHIX

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

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

Diversification Opportunities for Pacer Financial and CHIX

-0.49

Correlation Coefficient

Pacer Financial  CHIX

Very good diversification

The 3 months correlation between Pacer and CHIX is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Financial and CHIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIX and Pacer Financial 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 Financial are associated (or correlated) with CHIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIX has no effect on the direction of Pacer Financial i.e., Pacer Financial and CHIX go up and down completely randomly.

Pair Corralation between Pacer Financial and CHIX

If you would invest  1,172  in CHIX on September 19, 2024 and sell it today you would earn a total of  0.00  from holding CHIX or generate 0.0% return on investment over 90 days.

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

Pacer Financial  vs.  CHIX

Pacer Financial

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Pacer Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Pacer Financial showed solid returns over the last few months and may actually be approaching a breakup point.

CHIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, CHIX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Financial and CHIX

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

The idea behind Pacer Financial and CHIX 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.