Correlation Between Pacer BlueStar and Pacer Cash

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

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

Diversification Opportunities for Pacer BlueStar and Pacer Cash

0.77

Correlation Coefficient

Pacer BlueStar  Pacer Cash

Poor diversification

The 3 months correlation between Pacer and Pacer is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pacer BlueStar Digital and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and Pacer BlueStar 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 BlueStar Digital are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Pacer BlueStar i.e., Pacer BlueStar and Pacer Cash go up and down completely randomly.

Pair Corralation between Pacer BlueStar and Pacer Cash

Given the investment horizon of 90 days Pacer BlueStar Digital is expected to generate 1.25 times more return on investment than Pacer Cash. However, Pacer BlueStar is 1.25 times more volatile than Pacer Cash Cows. It trades about 0.04 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.03 per unit of risk. If you would invest  2,499  in Pacer BlueStar Digital on October 6, 2024 and sell it today you would earn a total of  65.00  from holding Pacer BlueStar Digital or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Pacer BlueStar Digital  vs.  Pacer Cash Cows

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.

Pacer Cash Cows

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Cash Cows are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pacer BlueStar and Pacer Cash

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

The idea behind Pacer BlueStar Digital and Pacer Cash Cows 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.