Correlation Between IMGP DBi and Pacer Cash

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

By analyzing existing cross correlation between iMGP DBi Managed and Pacer Cash Cows, you can compare the effects of market volatilities on IMGP DBi and Pacer Cash 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 IMGP DBi with a short position of Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMGP DBi and Pacer Cash.

Diversification Opportunities for IMGP DBi and Pacer Cash

-0.04

Correlation Coefficient

IMGP DBi  Pacer Cash

Good diversification

The 3 months correlation between IMGP and Pacer is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding iMGP DBi Managed and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and IMGP DBi 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 iMGP DBi Managed are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of IMGP DBi i.e., IMGP DBi and Pacer Cash go up and down completely randomly.

Pair Corralation between IMGP DBi and Pacer Cash

Given the investment horizon of 90 days IMGP DBi is expected to generate 2.26 times less return on investment than Pacer Cash. But when comparing it to its historical volatility, iMGP DBi Managed is 2.11 times less risky than Pacer Cash. It trades about 0.19 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,922  in Pacer Cash Cows on September 5, 2024 and sell it today you would earn a total of  135.00  from holding Pacer Cash Cows or generate 3.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

iMGP DBi Managed  vs.  Pacer Cash Cows

iMGP DBi Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMGP DBi Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IMGP DBi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pacer Cash Cows

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with IMGP DBi and Pacer Cash

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

The idea behind iMGP DBi Managed and Pacer Cash Cows 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.