Correlation Between Pacer Pacific and Pacer Funds

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

Diversification Opportunities for Pacer Pacific and Pacer Funds

0.84

Correlation Coefficient

Pacer Pacific  Pacer Funds

Very poor diversification

The 3 months correlation between Pacer and Pacer is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds 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 Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and Pacer Funds go up and down completely randomly.

Pair Corralation between Pacer Pacific and Pacer Funds

Given the investment horizon of 90 days Pacer Pacific Asset is expected to generate 0.09 times more return on investment than Pacer Funds. However, Pacer Pacific Asset is 10.96 times less risky than Pacer Funds. It trades about -0.1 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about -0.04 per unit of risk. If you would invest  4,772  in Pacer Pacific Asset on October 4, 2024 and sell it today you would lose (17.00) from holding Pacer Pacific Asset or give up 0.36% of portfolio value over 90 days.

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

Pacer Pacific Asset  vs.  Pacer Funds Trust

Pacer Pacific Asset

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Pacific Asset are ranked lower than 11 (%) 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 Funds Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Funds Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Pacer Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pacer Pacific and Pacer Funds

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

The idea behind Pacer Pacific Asset and Pacer Funds 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.