Correlation Between Burney Factor and Pacer Funds

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

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

Diversification Opportunities for Burney Factor and Pacer Funds

0.16

Correlation Coefficient

Burney Factor  Pacer Funds

Average diversification

The 3 months correlation between Burney and Pacer is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Burney Factor Rotation 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 Burney Factor 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 Burney Factor Rotation 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 Burney Factor i.e., Burney Factor and Pacer Funds go up and down completely randomly.

Pair Corralation between Burney Factor and Pacer Funds

Given the investment horizon of 90 days Burney Factor Rotation is expected to under-perform the Pacer Funds. In addition to that, Burney Factor is 1.47 times more volatile than Pacer Funds Trust. It trades about -0.03 of its total potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.08 per unit of volatility. If you would invest  1,892  in Pacer Funds Trust on December 28, 2024 and sell it today you would earn a total of  75.00  from holding Pacer Funds Trust or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Burney Factor Rotation  vs.  Pacer Funds Trust

Burney Factor Rotation

Risk-Adjusted Performance

Very Weak

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

Pacer Funds Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Funds Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Pacer Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Burney Factor and Pacer Funds

The main advantage of trading using opposite Burney Factor and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burney Factor 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.

The idea behind Burney Factor Rotation and Pacer Funds 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.