Correlation Between Pacer Cash and Pacer Developed

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

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

Diversification Opportunities for Pacer Cash and Pacer Developed

-0.57

Correlation Coefficient

Pacer Cash  Pacer Developed

Excellent diversification

The 3 months correlation between Pacer and Pacer is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Pacer Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Developed Markets and Pacer Cash 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 Cash Cows are associated (or correlated) with Pacer Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Developed Markets has no effect on the direction of Pacer Cash i.e., Pacer Cash and Pacer Developed go up and down completely randomly.

Pair Corralation between Pacer Cash and Pacer Developed

Considering the 90-day investment horizon Pacer Cash Cows is expected to under-perform the Pacer Developed. In addition to that, Pacer Cash is 1.56 times more volatile than Pacer Developed Markets. It trades about -0.04 of its total potential returns per unit of risk. Pacer Developed Markets is currently generating about 0.22 per unit of volatility. If you would invest  2,883  in Pacer Developed Markets on December 28, 2024 and sell it today you would earn a total of  328.00  from holding Pacer Developed Markets or generate 11.38% return on investment over 90 days.

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

Pacer Cash Cows  vs.  Pacer Developed Markets

Pacer Cash Cows

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Cash Cows has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pacer Developed Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Developed Markets are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pacer Developed may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pacer Cash and Pacer Developed

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

The idea behind Pacer Cash Cows and Pacer Developed Markets 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.