Correlation Between Pacer Financial and Pacer Emerging

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

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

Diversification Opportunities for Pacer Financial and Pacer Emerging

-0.86

Correlation Coefficient

Pacer Financial  Pacer Emerging

Pay attention - limited upside

The 3 months correlation between Pacer and Pacer is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Financial and Pacer Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Emerging Markets 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 Pacer Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Emerging Markets has no effect on the direction of Pacer Financial i.e., Pacer Financial and Pacer Emerging go up and down completely randomly.

Pair Corralation between Pacer Financial and Pacer Emerging

Given the investment horizon of 90 days Pacer Financial is expected to generate 0.73 times more return on investment than Pacer Emerging. However, Pacer Financial is 1.37 times less risky than Pacer Emerging. It trades about 0.11 of its potential returns per unit of risk. Pacer Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest  2,873  in Pacer Financial on October 22, 2024 and sell it today you would earn a total of  1,130  from holding Pacer Financial or generate 39.33% return on investment over 90 days.

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

Pacer Financial  vs.  Pacer Emerging Markets

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. In spite of comparatively stable basic indicators, Pacer Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pacer Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Pacer Financial and Pacer Emerging

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

The idea behind Pacer Financial and Pacer Emerging Markets 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.