Correlation Between Pacer Funds and Pacer Pacific

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

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

Diversification Opportunities for Pacer Funds and Pacer Pacific

-0.47

Correlation Coefficient

Pacer Funds  Pacer Pacific

Very good diversification

The 3 months correlation between Pacer and Pacer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset and Pacer Funds 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 Funds Trust are associated (or correlated) with Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of Pacer Funds i.e., Pacer Funds and Pacer Pacific go up and down completely randomly.

Pair Corralation between Pacer Funds and Pacer Pacific

Given the investment horizon of 90 days Pacer Funds Trust is expected to under-perform the Pacer Pacific. In addition to that, Pacer Funds is 13.48 times more volatile than Pacer Pacific Asset. It trades about -0.08 of its total potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.6 per unit of volatility. If you would invest  4,694  in Pacer Pacific Asset on October 6, 2024 and sell it today you would earn a total of  68.00  from holding Pacer Pacific Asset or generate 1.45% return on investment over 90 days.

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

Pacer Funds Trust  vs.  Pacer Pacific Asset

Pacer Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pacer Pacific Asset

Risk-Adjusted Performance

49 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Pacific Asset are ranked lower than 49 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pacer Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pacer Funds and Pacer Pacific

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

The idea behind Pacer Funds Trust and Pacer Pacific Asset 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.