Correlation Between Pacer Cash and Point Bridge

Can any of the company-specific risk be diversified away by investing in both Pacer Cash and Point Bridge 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 Cash and Point Bridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacer Cash Cows and Point Bridge GOP, you can compare the effects of market volatilities on Pacer Cash and Point Bridge 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 Cash with a short position of Point Bridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Cash and Point Bridge.

Diversification Opportunities for Pacer Cash and Point Bridge

0.91

Correlation Coefficient

Pacer Cash  Point Bridge

Almost no diversification

The 3 months correlation between Pacer and Point is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Cash Cows and Point Bridge GOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Point Bridge GOP and Pacer Cash 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 Cash Cows are associated (or correlated) with Point Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Point Bridge GOP has no effect on the direction of Pacer Cash i.e., Pacer Cash and Point Bridge go up and down completely randomly.

Pair Corralation between Pacer Cash and Point Bridge

Given the investment horizon of 90 days Pacer Cash is expected to generate 1.0 times less return on investment than Point Bridge. In addition to that, Pacer Cash is 1.2 times more volatile than Point Bridge GOP. It trades about 0.43 of its total potential returns per unit of risk. Point Bridge GOP is currently generating about 0.52 per unit of volatility. If you would invest  4,460  in Point Bridge GOP on February 20, 2025 and sell it today you would earn a total of  486.00  from holding Point Bridge GOP or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Pacer Cash Cows  vs.  Point Bridge GOP

Pacer Cash Cows

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Cash Cows has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Point Bridge GOP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Point Bridge GOP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Point Bridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacer Cash and Point Bridge

The main advantage of trading using opposite Pacer Cash and Point Bridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Cash position performs unexpectedly, Point Bridge 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 Point Bridge will offset losses from the drop in Point Bridge's long position.

The idea behind Pacer Cash Cows and Point Bridge GOP 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.