Correlation Between Xtrackers Harvest and Pacer Financial

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

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

Diversification Opportunities for Xtrackers Harvest and Pacer Financial

-0.01

Correlation Coefficient

Xtrackers Harvest  Pacer Financial

Good diversification

The 3 months correlation between Xtrackers and Pacer is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI and Pacer Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Financial and Xtrackers Harvest 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 Xtrackers Harvest CSI are associated (or correlated) with Pacer Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Financial has no effect on the direction of Xtrackers Harvest i.e., Xtrackers Harvest and Pacer Financial go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and Pacer Financial

Given the investment horizon of 90 days Xtrackers Harvest is expected to generate 2.02 times less return on investment than Pacer Financial. In addition to that, Xtrackers Harvest is 1.47 times more volatile than Pacer Financial. It trades about 0.11 of its total potential returns per unit of risk. Pacer Financial is currently generating about 0.33 per unit of volatility. If you would invest  1,354  in Pacer Financial on September 16, 2024 and sell it today you would earn a total of  277.00  from holding Pacer Financial or generate 20.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	32.31%
Values	Daily Returns

Xtrackers Harvest CSI  vs.  Pacer Financial

Xtrackers Harvest CSI

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Xtrackers Harvest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pacer Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Pacer Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Pacer Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtrackers Harvest and Pacer Financial

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

The idea behind Xtrackers Harvest CSI and Pacer Financial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.