Correlation Between Pacer Financial and Invesco KBW

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

By analyzing existing cross correlation between Pacer Financial and Invesco KBW Premium, you can compare the effects of market volatilities on Pacer Financial and Invesco KBW 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 Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Financial and Invesco KBW.

Diversification Opportunities for Pacer Financial and Invesco KBW

0.0

Correlation Coefficient

Pacer Financial  Invesco KBW

Pay attention - limited upside

The 3 months correlation between Pacer and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Financial and Invesco KBW Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Premium 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 Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Premium has no effect on the direction of Pacer Financial i.e., Pacer Financial and Invesco KBW go up and down completely randomly.

Pair Corralation between Pacer Financial and Invesco KBW

If you would invest (100.00) in Pacer Financial on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Pacer Financial or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Pacer Financial  vs.  Invesco KBW Premium

Pacer Financial

Risk-Adjusted Performance

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.

Invesco KBW Premium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco KBW Premium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Invesco KBW 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 Financial and Invesco KBW

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

The idea behind Pacer Financial and Invesco KBW Premium 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.