Correlation Between Pacer Trendpilot and Pacer CFRA

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

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

Diversification Opportunities for Pacer Trendpilot and Pacer CFRA

0.59

Correlation Coefficient

Pacer Trendpilot  Pacer CFRA

Very weak diversification

The 3 months correlation between Pacer and Pacer is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot Bond and Pacer CFRA Stovall Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer CFRA Stovall and Pacer Trendpilot 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 Trendpilot Bond are associated (or correlated) with Pacer CFRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer CFRA Stovall has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and Pacer CFRA go up and down completely randomly.

Pair Corralation between Pacer Trendpilot and Pacer CFRA

Given the investment horizon of 90 days Pacer Trendpilot is expected to generate 1.03 times less return on investment than Pacer CFRA. But when comparing it to its historical volatility, Pacer Trendpilot Bond is 3.11 times less risky than Pacer CFRA. It trades about 0.09 of its potential returns per unit of risk. Pacer CFRA Stovall Equal is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,780  in Pacer CFRA Stovall Equal on October 24, 2024 and sell it today you would earn a total of  49.00  from holding Pacer CFRA Stovall Equal or generate 1.3% return on investment over 90 days.

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

Pacer Trendpilot Bond  vs.  Pacer CFRA Stovall Equal

Pacer Trendpilot Bond

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Trendpilot Bond are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Pacer Trendpilot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer CFRA Stovall

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer CFRA Stovall Equal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pacer CFRA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pacer Trendpilot and Pacer CFRA

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

The idea behind Pacer Trendpilot Bond and Pacer CFRA Stovall Equal 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.