Correlation Between Pacer Swan and Innovator ETFs

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

By analyzing existing cross correlation between Pacer Swan SOS and Innovator ETFs Trust, you can compare the effects of market volatilities on Pacer Swan and Innovator ETFs 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 Swan with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacer Swan and Innovator ETFs.

Diversification Opportunities for Pacer Swan and Innovator ETFs

-0.17

Correlation Coefficient

Pacer Swan  Innovator ETFs

Good diversification

The 3 months correlation between Pacer and Innovator is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pacer Swan SOS and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Pacer Swan 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 Swan SOS are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Pacer Swan i.e., Pacer Swan and Innovator ETFs go up and down completely randomly.

Pair Corralation between Pacer Swan and Innovator ETFs

Given the investment horizon of 90 days Pacer Swan SOS is expected to under-perform the Innovator ETFs. But the etf apears to be less risky and, when comparing its historical volatility, Pacer Swan SOS is 1.0 times less risky than Innovator ETFs. The etf trades about -0.05 of its potential returns per unit of risk. The Innovator ETFs Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,866  in Innovator ETFs Trust on December 23, 2024 and sell it today you would earn a total of  186.00  from holding Innovator ETFs Trust or generate 6.49% return on investment over 90 days.

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

Pacer Swan SOS  vs.  Innovator ETFs Trust

Pacer Swan SOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Swan SOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Pacer Swan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Innovator ETFs Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Innovator ETFs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pacer Swan and Innovator ETFs

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

The idea behind Pacer Swan SOS and Innovator ETFs Trust 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.