Correlation Between Pacer BlueStar and Pacer Lunt

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

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

Diversification Opportunities for Pacer BlueStar and Pacer Lunt

0.4

Correlation Coefficient

Pacer BlueStar  Pacer Lunt

Very weak diversification

The 3 months correlation between Pacer and Pacer is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pacer BlueStar Engineering and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large and Pacer BlueStar 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 BlueStar Engineering are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt Large has no effect on the direction of Pacer BlueStar i.e., Pacer BlueStar and Pacer Lunt go up and down completely randomly.

Pair Corralation between Pacer BlueStar and Pacer Lunt

Given the investment horizon of 90 days Pacer BlueStar Engineering is expected to generate 1.32 times more return on investment than Pacer Lunt. However, Pacer BlueStar is 1.32 times more volatile than Pacer Lunt Large. It trades about -0.08 of its potential returns per unit of risk. Pacer Lunt Large is currently generating about -0.27 per unit of risk. If you would invest  2,261  in Pacer BlueStar Engineering on October 9, 2024 and sell it today you would lose (48.00) from holding Pacer BlueStar Engineering or give up 2.12% of portfolio value over 90 days.

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

Pacer BlueStar Engineering  vs.  Pacer Lunt Large

Pacer BlueStar Engin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer BlueStar Engineering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pacer Lunt Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pacer BlueStar and Pacer Lunt

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

The idea behind Pacer BlueStar Engineering and Pacer Lunt Large 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.