Correlation Between Pacer Pacific and PIMCO ETF

Can any of the company-specific risk be diversified away by investing in both Pacer Pacific and PIMCO ETF 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 PIMCO ETF 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 PIMCO ETF Trust, you can compare the effects of market volatilities on Pacer Pacific and PIMCO ETF 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 PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Pacific and PIMCO ETF.

Diversification Opportunities for Pacer Pacific and PIMCO ETF

0.24

Correlation Coefficient

Pacer Pacific  PIMCO ETF

Modest diversification

The 3 months correlation between Pacer and PIMCO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust 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 PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and PIMCO ETF go up and down completely randomly.

Pair Corralation between Pacer Pacific and PIMCO ETF

Given the investment horizon of 90 days Pacer Pacific Asset is expected to generate about the same return on investment as PIMCO ETF Trust. But, Pacer Pacific Asset is 1.14 times less risky than PIMCO ETF. It trades about 0.01 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 0.01 per unit of risk. If you would invest  5,052  in PIMCO ETF Trust on December 28, 2024 and sell it today you would earn a total of  3.00  from holding PIMCO ETF Trust or generate 0.06% return on investment over 90 days.

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

Pacer Pacific Asset  vs.  PIMCO ETF Trust

Pacer Pacific Asset

Risk-Adjusted Performance

Very Weak

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

PIMCO ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIMCO ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, PIMCO ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Pacific and PIMCO ETF

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

The idea behind Pacer Pacific Asset and PIMCO ETF Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.