Correlation Between First Trust and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both First Trust and Innovator Capital 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 First Trust and Innovator Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Cboe and Innovator Capital Management, you can compare the effects of market volatilities on First Trust and Innovator Capital 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 First Trust with a short position of Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Innovator Capital.
Diversification Opportunities for First Trust and Innovator Capital
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Innovator is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Cboe and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital and First Trust 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 First Trust Cboe are associated (or correlated) with Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of First Trust i.e., First Trust and Innovator Capital go up and down completely randomly.
Pair Corralation between First Trust and Innovator Capital
If you would invest 3,064 in First Trust Cboe on November 4, 2024 and sell it today you would earn a total of 34.00 from holding First Trust Cboe or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
First Trust Cboe vs. Innovator Capital Management
Performance |
| Timeline |
| First Trust Cboe |
| Innovator Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
First Trust and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Innovator Capital
The main advantage of trading using opposite First Trust and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Innovator Capital 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 Capital will offset losses from the drop in Innovator Capital's long position.| First Trust vs. FT Cboe Vest | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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