Correlation Between Pacer Global and Pacer Small

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

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

Diversification Opportunities for Pacer Global and Pacer Small

-0.17

Correlation Coefficient

Pacer Global  Pacer Small

Good diversification

The 3 months correlation between Pacer and Pacer is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Global Cash and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and Pacer Global 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 Global Cash are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of Pacer Global i.e., Pacer Global and Pacer Small go up and down completely randomly.

Pair Corralation between Pacer Global and Pacer Small

Given the investment horizon of 90 days Pacer Global Cash is expected to under-perform the Pacer Small. But the etf apears to be less risky and, when comparing its historical volatility, Pacer Global Cash is 2.19 times less risky than Pacer Small. The etf trades about -0.02 of its potential returns per unit of risk. The Pacer Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,477  in Pacer Small Cap on September 2, 2024 and sell it today you would earn a total of  304.00  from holding Pacer Small Cap or generate 6.79% return on investment over 90 days.

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

Pacer Global Cash  vs.  Pacer Small Cap

Pacer Global Cash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Global Cash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pacer Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pacer Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Small Cap are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Pacer Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pacer Global and Pacer Small

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

The idea behind Pacer Global Cash and Pacer Small Cap 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.