Correlation Between Innovator and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Innovator 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 Innovator and Pacer Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator SP 500 and Pacer Swan SOS, you can compare the effects of market volatilities on Innovator 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 Innovator with a short position of Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Pacer Swan.
Diversification Opportunities for Innovator and Pacer Swan
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and Pacer is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 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 Innovator 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 Innovator SP 500 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 Innovator i.e., Innovator and Pacer Swan go up and down completely randomly.
Pair Corralation between Innovator and Pacer Swan
Given the investment horizon of 90 days Innovator is expected to generate 1.21 times less return on investment than Pacer Swan. But when comparing it to its historical volatility, Innovator SP 500 is 1.35 times less risky than Pacer Swan. It trades about 0.13 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,139 in Pacer Swan SOS on August 26, 2024 and sell it today you would earn a total of 792.00 from holding Pacer Swan SOS or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP 500 vs. Pacer Swan SOS
Performance |
| Timeline |
| Innovator SP 500 |
| Pacer Swan SOS |
Innovator and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and Pacer Swan
The main advantage of trading using opposite Innovator and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator 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.| Innovator vs. First Trust Cboe | Innovator vs. FT Cboe Vest | Innovator vs. Innovator SP 500 | Innovator vs. FT Cboe Vest |
| Pacer Swan vs. First Trust Cboe | Pacer Swan vs. FT Cboe Vest | Pacer Swan vs. Innovator SP 500 | Pacer Swan vs. FT Cboe Vest |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |