Correlation Between Pacer CSOP and Xtrackers Harvest

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

By analyzing existing cross correlation between Pacer CSOP FTSE and Xtrackers Harvest CSI, you can compare the effects of market volatilities on Pacer CSOP and Xtrackers Harvest 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 CSOP with a short position of Xtrackers Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer CSOP and Xtrackers Harvest.

Diversification Opportunities for Pacer CSOP and Xtrackers Harvest

0.61

Correlation Coefficient

Pacer CSOP  Xtrackers Harvest

Poor diversification

The 3 months correlation between Pacer and Xtrackers is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pacer CSOP FTSE and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and Pacer CSOP 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 CSOP FTSE are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of Pacer CSOP i.e., Pacer CSOP and Xtrackers Harvest go up and down completely randomly.

Pair Corralation between Pacer CSOP and Xtrackers Harvest

Given the investment horizon of 90 days Pacer CSOP FTSE is expected to generate 0.65 times more return on investment than Xtrackers Harvest. However, Pacer CSOP FTSE is 1.53 times less risky than Xtrackers Harvest. It trades about 0.08 of its potential returns per unit of risk. Xtrackers Harvest CSI is currently generating about -0.01 per unit of risk. If you would invest  1,375  in Pacer CSOP FTSE on March 4, 2024 and sell it today you would earn a total of  61.00  from holding Pacer CSOP FTSE or generate 4.44% return on investment over 90 days.

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

Pacer CSOP FTSE  vs.  Xtrackers Harvest CSI

Pacer CSOP FTSE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer CSOP FTSE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Pacer CSOP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Xtrackers Harvest CSI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers Harvest CSI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Xtrackers Harvest is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pacer CSOP and Xtrackers Harvest

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

The idea behind Pacer CSOP FTSE and Xtrackers Harvest CSI 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.