Correlation Between Pacer Swan and Pacer Swan

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

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

Diversification Opportunities for Pacer Swan and Pacer Swan

0.93

Correlation Coefficient

Pacer Swan  Pacer Swan

Almost no diversification

The 3 months correlation between Pacer and Pacer is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Swan SOS and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS and Pacer Swan 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 Swan SOS are associated (or correlated) with Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of Pacer Swan i.e., Pacer Swan and Pacer Swan go up and down completely randomly.

Pair Corralation between Pacer Swan and Pacer Swan

Given the investment horizon of 90 days Pacer Swan SOS is expected to under-perform the Pacer Swan. In addition to that, Pacer Swan is 1.15 times more volatile than Pacer Swan SOS. It trades about -0.03 of its total potential returns per unit of risk. Pacer Swan SOS is currently generating about -0.03 per unit of volatility. If you would invest  2,770  in Pacer Swan SOS on December 27, 2024 and sell it today you would lose (28.00) from holding Pacer Swan SOS or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Pacer Swan SOS  vs.  Pacer Swan SOS

Pacer Swan SOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Swan SOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pacer Swan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Swan SOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Swan SOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Pacer Swan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Swan and Pacer Swan

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

The idea behind Pacer Swan SOS and Pacer Swan SOS 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.

Check out your portfolio center.

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.