Correlation Between Spirit Realty and Pacer Financial

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

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

Diversification Opportunities for Spirit Realty and Pacer Financial

0.81

Correlation Coefficient

Spirit Realty  Pacer Financial

Very poor diversification

The 3 months correlation between Spirit and Pacer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Realty Capital and Pacer Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Financial and Spirit Realty 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 Spirit Realty Capital 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 Spirit Realty i.e., Spirit Realty and Pacer Financial go up and down completely randomly.

Pair Corralation between Spirit Realty and Pacer Financial

If you would invest  740.00  in Pacer Financial on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Pacer Financial or generate 0.0% return on investment over 90 days.

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

Spirit Realty Capital  vs.  Pacer Financial

Spirit Realty Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirit Realty Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Spirit Realty is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Spirit Realty and Pacer Financial

The main advantage of trading using opposite Spirit Realty and Pacer Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Realty 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 Spirit Realty Capital 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .