Correlation Between Pacer Funds and Bausch

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

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

Diversification Opportunities for Pacer Funds and Bausch

-0.2

Correlation Coefficient

Pacer Funds  Bausch

Good diversification

The 3 months correlation between Pacer and Bausch is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies and Pacer Funds 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 Funds Trust are associated (or correlated) with Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Pacer Funds i.e., Pacer Funds and Bausch go up and down completely randomly.

Pair Corralation between Pacer Funds and Bausch

Given the investment horizon of 90 days Pacer Funds Trust is expected to under-perform the Bausch. But the etf apears to be less risky and, when comparing its historical volatility, Pacer Funds Trust is 1.02 times less risky than Bausch. The etf trades about -0.06 of its potential returns per unit of risk. The Bausch Health Companies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,200  in Bausch Health Companies on December 28, 2024 and sell it today you would lose (25.00) from holding Bausch Health Companies or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Pacer Funds Trust  vs.  Bausch Health Companies

Pacer Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Bausch Health Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bausch is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Funds and Bausch

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

The idea behind Pacer Funds Trust and Bausch Health Companies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.