Correlation Between Pacer Global and JPMorgan Equity

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

By analyzing existing cross correlation between Pacer Global Cash and JPMorgan Equity Premium, you can compare the effects of market volatilities on Pacer Global and JPMorgan Equity 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 Global with a short position of JPMorgan Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Global and JPMorgan Equity.

Diversification Opportunities for Pacer Global and JPMorgan Equity

0.08

Correlation Coefficient

Pacer Global  JPMorgan Equity

Significant diversification

The 3 months correlation between Pacer and JPMorgan is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Global Cash and JPMorgan Equity Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Equity Premium and Pacer Global 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 Global Cash are associated (or correlated) with JPMorgan Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Equity Premium has no effect on the direction of Pacer Global i.e., Pacer Global and JPMorgan Equity go up and down completely randomly.

Pair Corralation between Pacer Global and JPMorgan Equity

Given the investment horizon of 90 days Pacer Global Cash is expected to generate 0.96 times more return on investment than JPMorgan Equity. However, Pacer Global Cash is 1.05 times less risky than JPMorgan Equity. It trades about 0.27 of its potential returns per unit of risk. JPMorgan Equity Premium is currently generating about -0.01 per unit of risk. If you would invest  3,352  in Pacer Global Cash on December 29, 2024 and sell it today you would earn a total of  364.00  from holding Pacer Global Cash or generate 10.86% return on investment over 90 days.

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

Pacer Global Cash  vs.  JPMorgan Equity Premium

Pacer Global Cash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Global Cash are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Pacer Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JPMorgan Equity Premium

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Equity Premium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, JPMorgan Equity is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pacer Global and JPMorgan Equity

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

The idea behind Pacer Global Cash and JPMorgan Equity Premium 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.