Correlation Between Stellar and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Stellar 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 Stellar and Pacer Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Pacer Swan SOS, you can compare the effects of market volatilities on Stellar 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 Stellar with a short position of Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Pacer Swan.
Diversification Opportunities for Stellar and Pacer Swan
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stellar and Pacer is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Stellar 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 Stellar 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 Stellar 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 Stellar i.e., Stellar and Pacer Swan go up and down completely randomly.
Pair Corralation between Stellar and Pacer Swan
Assuming the 90 days trading horizon Stellar is expected to generate 16.99 times more return on investment than Pacer Swan. However, Stellar is 16.99 times more volatile than Pacer Swan SOS. It trades about 0.1 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.12 per unit of risk. If you would invest 8.60 in Stellar on November 2, 2024 and sell it today you would earn a total of 34.40 from holding Stellar or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.12% |
| Values | Daily Returns |
Stellar vs. Pacer Swan SOS
Performance |
| Timeline |
| Stellar |
| Pacer Swan SOS |
Stellar and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Pacer Swan
The main advantage of trading using opposite Stellar and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar 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. Pacer Swan SOS | Pacer Swan vs. Pacer Swan SOS | Pacer Swan vs. Pacer Swan SOS | Pacer Swan vs. Pacer Swan SOS |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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