Correlation Between Innovator ETFs and Pacer Trendpilot

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Pacer Trendpilot 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 Trendpilot 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 Trendpilot 100, you can compare the effects of market volatilities on Innovator ETFs and Pacer Trendpilot 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 Trendpilot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Pacer Trendpilot.

Diversification Opportunities for Innovator ETFs and Pacer Trendpilot

0.85

Correlation Coefficient

Innovator ETFs  Pacer Trendpilot

Very poor diversification

The 3 months correlation between Innovator and Pacer is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Pacer Trendpilot 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot 100 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 Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot 100 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between Innovator ETFs and Pacer Trendpilot

Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.16 times less return on investment than Pacer Trendpilot. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.36 times less risky than Pacer Trendpilot. It trades about 0.13 of its potential returns per unit of risk. Pacer Trendpilot 100 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,198  in Pacer Trendpilot 100 on August 30, 2024 and sell it today you would earn a total of  295.00  from holding Pacer Trendpilot 100 or generate 4.1% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Pacer Trendpilot 100

Innovator ETFs Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Innovator ETFs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Trendpilot 100

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Trendpilot 100 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pacer Trendpilot is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Innovator ETFs and Pacer Trendpilot

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

The idea behind Innovator ETFs Trust and Pacer Trendpilot 100 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.