Correlation Between Pacer Financial and Global X

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

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

Diversification Opportunities for Pacer Financial and Global X

-0.47

Correlation Coefficient

Pacer Financial  Global X

Very good diversification

The 3 months correlation between Pacer and Global is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Financial and Global X Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Data and Pacer Financial 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 Financial are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Data has no effect on the direction of Pacer Financial i.e., Pacer Financial and Global X go up and down completely randomly.

Pair Corralation between Pacer Financial and Global X

Considering the 90-day investment horizon Pacer Financial is expected to under-perform the Global X. In addition to that, Pacer Financial is 5.11 times more volatile than Global X Data. It trades about -0.04 of its total potential returns per unit of risk. Global X Data is currently generating about 0.05 per unit of volatility. If you would invest  1,286  in Global X Data on October 10, 2024 and sell it today you would earn a total of  427.00  from holding Global X Data or generate 33.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	26.26%
Values	Daily Returns

Pacer Financial  vs.  Global X Data

Pacer Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Pacer Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Global X Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Data has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Global X is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pacer Financial and Global X

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

The idea behind Pacer Financial and Global X Data 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.