Correlation Between Pacer BlueStar and Pacer Pacific

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

Diversification Opportunities for Pacer BlueStar and Pacer Pacific

0.63

Correlation Coefficient

Pacer BlueStar  Pacer Pacific

Poor diversification

The 3 months correlation between Pacer and Pacer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pacer BlueStar Digital and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset 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 Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of Pacer BlueStar i.e., Pacer BlueStar and Pacer Pacific go up and down completely randomly.

Pair Corralation between Pacer BlueStar and Pacer Pacific

Given the investment horizon of 90 days Pacer BlueStar Digital is expected to generate 13.65 times more return on investment than Pacer Pacific. However, Pacer BlueStar is 13.65 times more volatile than Pacer Pacific Asset. It trades about 0.06 of its potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.41 per unit of risk. If you would invest  1,803  in Pacer BlueStar Digital on October 22, 2024 and sell it today you would earn a total of  751.00  from holding Pacer BlueStar Digital or generate 41.65% return on investment over 90 days.

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

Pacer BlueStar Digital  vs.  Pacer Pacific Asset

Pacer BlueStar Digital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer BlueStar Digital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Pacer BlueStar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pacer Pacific Asset

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Pacific Asset are ranked lower than 36 (%) 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.

Pair Trading with Pacer BlueStar and Pacer Pacific

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

The idea behind Pacer BlueStar Digital and Pacer Pacific Asset 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.