Correlation Between Core Alternative and Innovator Hedged
Can any of the company-specific risk be diversified away by investing in both Core Alternative and Innovator Hedged 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 Core Alternative and Innovator Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Alternative ETF and Innovator Hedged Nasdaq 100, you can compare the effects of market volatilities on Core Alternative and Innovator Hedged 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 Core Alternative with a short position of Innovator Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Alternative and Innovator Hedged.
Diversification Opportunities for Core Alternative and Innovator Hedged
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Core and Innovator is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Core Alternative ETF and Innovator Hedged Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Hedged Nasdaq and Core Alternative 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 Core Alternative ETF are associated (or correlated) with Innovator Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Hedged Nasdaq has no effect on the direction of Core Alternative i.e., Core Alternative and Innovator Hedged go up and down completely randomly.
Pair Corralation between Core Alternative and Innovator Hedged
Given the investment horizon of 90 days Core Alternative is expected to generate 3.85 times less return on investment than Innovator Hedged. But when comparing it to its historical volatility, Core Alternative ETF is 1.55 times less risky than Innovator Hedged. It trades about 0.03 of its potential returns per unit of risk. Innovator Hedged Nasdaq 100 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,591 in Innovator Hedged Nasdaq 100 on August 30, 2024 and sell it today you would earn a total of 31.00 from holding Innovator Hedged Nasdaq 100 or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Alternative ETF vs. Innovator Hedged Nasdaq 100
Performance |
| Timeline |
| Core Alternative ETF |
| Innovator Hedged Nasdaq |
Core Alternative and Innovator Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Alternative and Innovator Hedged
The main advantage of trading using opposite Core Alternative and Innovator Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Alternative position performs unexpectedly, Innovator Hedged 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 Hedged will offset losses from the drop in Innovator Hedged's long position.| Core Alternative vs. AGFiQ Market Neutral | Core Alternative vs. Cambria Global Momentum | Core Alternative vs. Cambria Global Asset | Core Alternative vs. Cambria Emerging Shareholder |
| Innovator Hedged vs. Alpha Architect Quantitative | Innovator Hedged vs. Alpha Architect International | Innovator Hedged vs. Alpha Architect International | Innovator Hedged vs. Alpha Architect Quantitative |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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