Correlation Between Pacer Pacific and Invesco Senior

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

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

Diversification Opportunities for Pacer Pacific and Invesco Senior

0.73

Correlation Coefficient

Pacer Pacific  Invesco Senior

Poor diversification

The 3 months correlation between Pacer and Invesco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and Invesco Senior Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Loan and Pacer Pacific 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 Pacific Asset are associated (or correlated) with Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Loan has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and Invesco Senior go up and down completely randomly.

Pair Corralation between Pacer Pacific and Invesco Senior

Given the investment horizon of 90 days Pacer Pacific Asset is expected to generate 0.72 times more return on investment than Invesco Senior. However, Pacer Pacific Asset is 1.4 times less risky than Invesco Senior. It trades about 0.13 of its potential returns per unit of risk. Invesco Senior Loan is currently generating about 0.01 per unit of risk. If you would invest  4,674  in Pacer Pacific Asset on December 28, 2024 and sell it today you would earn a total of  31.50  from holding Pacer Pacific Asset or generate 0.67% return on investment over 90 days.

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

Pacer Pacific Asset  vs.  Invesco Senior Loan

Pacer Pacific Asset

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Pacific Asset are ranked lower than 10 (%) 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.

Invesco Senior Loan

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Senior Loan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Invesco Senior is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pacer Pacific and Invesco Senior

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

The idea behind Pacer Pacific Asset and Invesco Senior Loan 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.