Correlation Between Boeing and Pacer Lunt
Can any of the company-specific risk be diversified away by investing in both Boeing and Pacer Lunt 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 Lunt 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 Lunt MidCap, you can compare the effects of market volatilities on Boeing and Pacer Lunt 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 Lunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Pacer Lunt.
Diversification Opportunities for Boeing and Pacer Lunt
-0.67 | Correlation Coefficient |
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 Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap 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 Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of Boeing i.e., Boeing and Pacer Lunt go up and down completely randomly.
Pair Corralation between Boeing and Pacer Lunt
Allowing for the 90-day total investment horizon Boeing is expected to generate 4.04 times less return on investment than Pacer Lunt. In addition to that, Boeing is 2.07 times more volatile than Pacer Lunt MidCap. It trades about 0.04 of its total potential returns per unit of risk. Pacer Lunt MidCap is currently generating about 0.36 per unit of volatility. If you would invest 4,659 in Pacer Lunt MidCap on August 28, 2024 and sell it today you would earn a total of 410.00 from holding Pacer Lunt MidCap or generate 8.8% 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 Lunt MidCap
Performance |
| Timeline |
| Boeing |
| Pacer Lunt MidCap |
Boeing and Pacer Lunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Pacer Lunt
The main advantage of trading using opposite Boeing and Pacer Lunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Pacer Lunt 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 Lunt will offset losses from the drop in Pacer Lunt's long position.The idea behind The Boeing and Pacer Lunt MidCap 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.| Pacer Lunt vs. Vanguard Mid Cap Index | Pacer Lunt vs. iShares Core SP | Pacer Lunt vs. SPDR SP MIDCAP | Pacer Lunt vs. First Trust Dorsey |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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