Correlation Between Innovator ETFs and Pacer Benchmark
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Pacer Benchmark 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 ETFs and Pacer Benchmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and Pacer Benchmark Industrial, you can compare the effects of market volatilities on Innovator ETFs and Pacer Benchmark 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 ETFs with a short position of Pacer Benchmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Pacer Benchmark.
Diversification Opportunities for Innovator ETFs and Pacer Benchmark
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Innovator and Pacer is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu and Innovator ETFs 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 ETFs Trust are associated (or correlated) with Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Pacer Benchmark go up and down completely randomly.
Pair Corralation between Innovator ETFs and Pacer Benchmark
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.26 times less return on investment than Pacer Benchmark. But when comparing it to its historical volatility, Innovator ETFs Trust is 2.78 times less risky than Pacer Benchmark. It trades about 0.12 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,681 in Pacer Benchmark Industrial on September 1, 2024 and sell it today you would earn a total of 243.00 from holding Pacer Benchmark Industrial or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Pacer Benchmark Industrial
Performance |
| Timeline |
| Innovator ETFs Trust |
| Pacer Benchmark Indu |
Innovator ETFs and Pacer Benchmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Pacer Benchmark
The main advantage of trading using opposite Innovator ETFs and Pacer Benchmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Pacer Benchmark 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 Benchmark will offset losses from the drop in Pacer Benchmark's long position.| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust |
| Pacer Benchmark vs. Aquagold International | Pacer Benchmark vs. Thrivent High Yield | Pacer Benchmark vs. Morningstar Unconstrained Allocation | Pacer Benchmark vs. High Yield Municipal Fund |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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