Correlation Between Pacer Pacific and Pacer BlueStar

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

Diversification Opportunities for Pacer Pacific and Pacer BlueStar

0.75

Correlation Coefficient

Pacer Pacific  Pacer BlueStar

Poor diversification

The 3 months correlation between Pacer and Pacer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and Pacer BlueStar Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer BlueStar Digital 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 Pacer BlueStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer BlueStar Digital has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and Pacer BlueStar go up and down completely randomly.

Pair Corralation between Pacer Pacific and Pacer BlueStar

Given the investment horizon of 90 days Pacer Pacific is expected to generate 4.45 times less return on investment than Pacer BlueStar. But when comparing it to its historical volatility, Pacer Pacific Asset is 25.13 times less risky than Pacer BlueStar. It trades about 0.6 of its potential returns per unit of risk. Pacer BlueStar Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,415  in Pacer BlueStar Digital on October 6, 2024 and sell it today you would earn a total of  149.00  from holding Pacer BlueStar Digital or generate 6.17% 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.  Pacer BlueStar Digital

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.

Pacer BlueStar Digital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer BlueStar Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Pacer BlueStar 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 Pacific and Pacer BlueStar

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

The idea behind Pacer Pacific Asset and Pacer BlueStar Digital 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.