Correlation Between Innovator ETFs and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Pacer Funds 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 Funds 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 Funds Trust, you can compare the effects of market volatilities on Innovator ETFs and Pacer Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Pacer Funds.
Diversification Opportunities for Innovator ETFs and Pacer Funds
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovator and Pacer is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Pacer Funds go up and down completely randomly.
Pair Corralation between Innovator ETFs and Pacer Funds
Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.48 times more return on investment than Pacer Funds. However, Innovator ETFs Trust is 2.08 times less risky than Pacer Funds. It trades about 0.15 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about -0.03 per unit of risk. If you would invest 2,161 in Innovator ETFs Trust on August 26, 2024 and sell it today you would earn a total of 794.00 from holding Innovator ETFs Trust or generate 36.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 34.81% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Pacer Funds Trust
Performance |
| Timeline |
| Innovator ETFs Trust |
| Pacer Funds Trust |
Innovator ETFs and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Pacer Funds
The main advantage of trading using opposite Innovator ETFs and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Pacer Funds 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 Funds will offset losses from the drop in Pacer Funds' long position.| Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. FT Cboe Vest | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. FT Cboe Vest |
| Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Davis Select International | Pacer Funds vs. iShares MSCI China | Pacer Funds vs. SmartETFs Dividend Builder |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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