Correlation Between GM and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both GM and Pacer Swan 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 GM and Pacer Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pacer Swan SOS, you can compare the effects of market volatilities on GM and Pacer Swan 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 GM with a short position of Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pacer Swan.
Diversification Opportunities for GM and Pacer Swan
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Pacer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS and GM 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 General Motors are associated (or correlated) with Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of GM i.e., GM and Pacer Swan go up and down completely randomly.
Pair Corralation between GM and Pacer Swan
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.36 times more return on investment than Pacer Swan. However, GM is 4.36 times more volatile than Pacer Swan SOS. It trades about 0.05 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.13 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,699 from holding General Motors or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Pacer Swan SOS
Performance |
| Timeline |
| General Motors |
| Pacer Swan SOS |
GM and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pacer Swan
The main advantage of trading using opposite GM and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pacer Swan 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 Swan will offset losses from the drop in Pacer Swan's long position.The idea behind General Motors and Pacer Swan SOS 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 Swan vs. Innovator ETFs Trust | Pacer Swan vs. First Trust Cboe | Pacer Swan vs. FT Cboe Vest | Pacer Swan vs. Innovator SP 500 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |