Correlation Between Pacer Pacific and Invesco Senior
Can any of the company-specific risk be diversified away by investing in both Pacer Pacific and Invesco Senior 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 Pacific and Invesco Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Pacific Asset and Invesco Senior Loan, you can compare the effects of market volatilities on Pacer Pacific and Invesco Senior 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 Pacific with a short position of Invesco Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Pacific and Invesco Senior.
Diversification Opportunities for Pacer Pacific and Invesco Senior
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pacer and Invesco is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Pacific Asset and Invesco Senior Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Senior Loan and Pacer Pacific 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 Pacific Asset are associated (or correlated) with Invesco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Senior Loan has no effect on the direction of Pacer Pacific i.e., Pacer Pacific and Invesco Senior go up and down completely randomly.
Pair Corralation between Pacer Pacific and Invesco Senior
Given the investment horizon of 90 days Pacer Pacific Asset is expected to generate 0.59 times more return on investment than Invesco Senior. However, Pacer Pacific Asset is 1.69 times less risky than Invesco Senior. It trades about 0.45 of its potential returns per unit of risk. Invesco Senior Loan is currently generating about 0.24 per unit of risk. If you would invest 4,031 in Pacer Pacific Asset on August 30, 2024 and sell it today you would earn a total of 732.00 from holding Pacer Pacific Asset or generate 18.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacer Pacific Asset vs. Invesco Senior Loan
Performance |
| Timeline |
| Pacer Pacific Asset |
| Invesco Senior Loan |
Pacer Pacific and Invesco Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Pacific and Invesco Senior
The main advantage of trading using opposite Pacer Pacific and Invesco Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Pacific position performs unexpectedly, Invesco Senior 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 Invesco Senior will offset losses from the drop in Invesco Senior's long position.| Pacer Pacific vs. Franklin Liberty High | Pacer Pacific vs. First Trust Senior | Pacer Pacific vs. Franklin Liberty International | Pacer Pacific vs. Franklin Liberty Short |
| Invesco Senior vs. Franklin Liberty High | Invesco Senior vs. Pacer Pacific Asset | Invesco Senior vs. First Trust Senior | Invesco Senior vs. Franklin Liberty International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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