Correlation Between Pacer Trendpilot and Pacer Lunt

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

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

Diversification Opportunities for Pacer Trendpilot and Pacer Lunt

-0.46

Correlation Coefficient

Pacer Trendpilot  Pacer Lunt

Very good diversification

The 3 months correlation between Pacer and Pacer is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Trendpilot Bond and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large and Pacer Trendpilot 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 Trendpilot Bond are associated (or correlated) with Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt Large has no effect on the direction of Pacer Trendpilot i.e., Pacer Trendpilot and Pacer Lunt go up and down completely randomly.

Pair Corralation between Pacer Trendpilot and Pacer Lunt

Given the investment horizon of 90 days Pacer Trendpilot is expected to generate 6.76 times less return on investment than Pacer Lunt. But when comparing it to its historical volatility, Pacer Trendpilot Bond is 4.09 times less risky than Pacer Lunt. It trades about 0.05 of its potential returns per unit of risk. Pacer Lunt Large is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,064  in Pacer Lunt Large on August 23, 2024 and sell it today you would earn a total of  83.00  from holding Pacer Lunt Large or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pacer Trendpilot Bond  vs.  Pacer Lunt Large

Pacer Trendpilot Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Trendpilot Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Pacer Trendpilot is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Lunt Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Lunt Large are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Pacer Lunt may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Pacer Trendpilot and Pacer Lunt

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

The idea behind Pacer Trendpilot Bond and Pacer Lunt Large 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.