Correlation Between Pacer Lunt and Adaptive Alpha

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

By analyzing existing cross correlation between Pacer Lunt Large and Adaptive Alpha Opportunities, you can compare the effects of market volatilities on Pacer Lunt and Adaptive Alpha 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 Lunt with a short position of Adaptive Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Lunt and Adaptive Alpha.

Diversification Opportunities for Pacer Lunt and Adaptive Alpha

0.83

Correlation Coefficient

Pacer Lunt  Adaptive Alpha

Very poor diversification

The 3 months correlation between Pacer and Adaptive is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Lunt Large and Adaptive Alpha Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Alpha Oppor and Pacer Lunt 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 Lunt Large are associated (or correlated) with Adaptive Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Alpha Oppor has no effect on the direction of Pacer Lunt i.e., Pacer Lunt and Adaptive Alpha go up and down completely randomly.

Pair Corralation between Pacer Lunt and Adaptive Alpha

Given the investment horizon of 90 days Pacer Lunt Large is expected to generate 0.87 times more return on investment than Adaptive Alpha. However, Pacer Lunt Large is 1.15 times less risky than Adaptive Alpha. It trades about 0.24 of its potential returns per unit of risk. Adaptive Alpha Opportunities is currently generating about 0.12 per unit of risk. If you would invest  3,380  in Pacer Lunt Large on May 4, 2025 and sell it today you would earn a total of  515.00  from holding Pacer Lunt Large or generate 15.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Pacer Lunt Large  vs.  Adaptive Alpha Opportunities

Pacer Lunt Large

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Lunt Large are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Pacer Lunt disclosed solid returns over the last few months and may actually be approaching a breakup point.

Adaptive Alpha Oppor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adaptive Alpha Opportunities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Adaptive Alpha may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pacer Lunt and Adaptive Alpha

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

The idea behind Pacer Lunt Large and Adaptive Alpha Opportunities 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.