Correlation Between Pacer Funds and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Pacer Funds 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 Pacer Funds and Pacer Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacer Funds Trust and Pacer Swan SOS, you can compare the effects of market volatilities on Pacer Funds 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 Pacer Funds with a short position of Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Funds and Pacer Swan.
Diversification Opportunities for Pacer Funds and Pacer Swan
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Pacer and Pacer is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Funds Trust 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 Pacer Funds 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 Funds Trust 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 Pacer Funds i.e., Pacer Funds and Pacer Swan go up and down completely randomly.
Pair Corralation between Pacer Funds and Pacer Swan
Given the investment horizon of 90 days Pacer Funds is expected to generate 1.02 times less return on investment than Pacer Swan. But when comparing it to its historical volatility, Pacer Funds Trust is 1.03 times less risky than Pacer Swan. It trades about 0.16 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Pacer Swan SOS on September 1, 2024 and sell it today you would earn a total of 163.00 from holding Pacer Swan SOS or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pacer Funds Trust vs. Pacer Swan SOS
Performance |
| Timeline |
| Pacer Funds Trust |
| Pacer Swan SOS |
Pacer Funds and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacer Funds and Pacer Swan
The main advantage of trading using opposite Pacer Funds and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacer Funds 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.| Pacer Funds vs. Innovator ETFs Trust | Pacer Funds vs. First Trust Cboe | Pacer Funds vs. Innovator SP 500 | Pacer Funds vs. Innovator Equity Power |
| Pacer Swan vs. Innovator ETFs Trust | Pacer Swan vs. First Trust Cboe | Pacer Swan vs. Innovator SP 500 | Pacer Swan vs. Innovator Equity Power |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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