Correlation Between Biotech Medics and Pacer American
Can any of the company-specific risk be diversified away by investing in both Biotech Medics and Pacer American 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 Biotech Medics and Pacer American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotech Medics Ne and Pacer American Energy, you can compare the effects of market volatilities on Biotech Medics and Pacer American 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 Biotech Medics with a short position of Pacer American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotech Medics and Pacer American.
Diversification Opportunities for Biotech Medics and Pacer American
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Biotech and Pacer is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Biotech Medics Ne and Pacer American Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer American Energy and Biotech Medics 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 Biotech Medics Ne are associated (or correlated) with Pacer American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer American Energy has no effect on the direction of Biotech Medics i.e., Biotech Medics and Pacer American go up and down completely randomly.
Pair Corralation between Biotech Medics and Pacer American
Given the investment horizon of 90 days Biotech Medics Ne is expected to generate 9.83 times more return on investment than Pacer American. However, Biotech Medics is 9.83 times more volatile than Pacer American Energy. It trades about 0.13 of its potential returns per unit of risk. Pacer American Energy is currently generating about 0.06 per unit of risk. If you would invest 1.00 in Biotech Medics Ne on November 3, 2024 and sell it today you would earn a total of 0.59 from holding Biotech Medics Ne or generate 59.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Biotech Medics Ne vs. Pacer American Energy
Performance |
| Timeline |
| Biotech Medics Ne |
| Pacer American Energy |
Biotech Medics and Pacer American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotech Medics and Pacer American
The main advantage of trading using opposite Biotech Medics and Pacer American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotech Medics position performs unexpectedly, Pacer American 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 American will offset losses from the drop in Pacer American's long position.| Biotech Medics vs. ANI Pharmaceuticals | Biotech Medics vs. Phibro Animal Health | Biotech Medics vs. Prestige Brand Holdings | Biotech Medics vs. Alpha Teknova |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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