Correlation Between Invesco BulletShares and Pacer BlueStar

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

By analyzing existing cross correlation between Invesco BulletShares 2031 and Pacer BlueStar Engineering, you can compare the effects of market volatilities on Invesco BulletShares and Pacer BlueStar 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 Invesco BulletShares with a short position of Pacer BlueStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco BulletShares and Pacer BlueStar.

Diversification Opportunities for Invesco BulletShares and Pacer BlueStar

0.31

Correlation Coefficient

Invesco BulletShares  Pacer BlueStar

Weak diversification

The 3 months correlation between Invesco and Pacer is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco BulletShares 2031 and Pacer BlueStar Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer BlueStar Engin and Invesco BulletShares 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 Invesco BulletShares 2031 are associated (or correlated) with Pacer BlueStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer BlueStar Engin has no effect on the direction of Invesco BulletShares i.e., Invesco BulletShares and Pacer BlueStar go up and down completely randomly.

Pair Corralation between Invesco BulletShares and Pacer BlueStar

Given the investment horizon of 90 days Invesco BulletShares 2031 is expected to generate 0.15 times more return on investment than Pacer BlueStar. However, Invesco BulletShares 2031 is 6.81 times less risky than Pacer BlueStar. It trades about 0.03 of its potential returns per unit of risk. Pacer BlueStar Engineering is currently generating about 0.0 per unit of risk. If you would invest  2,077  in Invesco BulletShares 2031 on December 20, 2024 and sell it today you would earn a total of  7.00  from holding Invesco BulletShares 2031 or generate 0.34% return on investment over 90 days.

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

Invesco BulletShares 2031  vs.  Pacer BlueStar Engineering

Invesco BulletShares 2031

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2031 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable primary indicators, Invesco BulletShares is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pacer BlueStar Engin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer BlueStar Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Pacer BlueStar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco BulletShares and Pacer BlueStar

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

The idea behind Invesco BulletShares 2031 and Pacer BlueStar Engineering 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.