Correlation Between Boeing and Pacer Swan

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

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

Diversification Opportunities for Boeing and Pacer Swan

-0.67

Correlation Coefficient

Boeing  Pacer Swan

Excellent diversification

The 3 months correlation between Boeing and Pacer is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS and Boeing 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 The Boeing are associated (or correlated) with Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of Boeing i.e., Boeing and Pacer Swan go up and down completely randomly.

Pair Corralation between Boeing and Pacer Swan

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Pacer Swan. In addition to that, Boeing is 9.49 times more volatile than Pacer Swan SOS. It trades about -0.02 of its total potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.26 per unit of volatility. If you would invest  2,670  in Pacer Swan SOS on September 4, 2024 and sell it today you would earn a total of  93.00  from holding Pacer Swan SOS or generate 3.48% return on investment over 90 days.

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

The Boeing  vs.  Pacer Swan SOS

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pacer Swan SOS

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Swan SOS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Pacer Swan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and Pacer Swan

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

The idea behind The Boeing and Pacer Swan SOS 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..