Correlation Between Innovator ETFs and VanEck Africa
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and VanEck Africa 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 VanEck Africa 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 VanEck Africa Index, you can compare the effects of market volatilities on Innovator ETFs and VanEck Africa 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 VanEck Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and VanEck Africa.
Diversification Opportunities for Innovator ETFs and VanEck Africa
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and VanEck is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and VanEck Africa Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Africa Index 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 VanEck Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Africa Index has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and VanEck Africa go up and down completely randomly.
Pair Corralation between Innovator ETFs and VanEck Africa
Given the investment horizon of 90 days Innovator ETFs is expected to generate 2.29 times less return on investment than VanEck Africa. But when comparing it to its historical volatility, Innovator ETFs Trust is 3.97 times less risky than VanEck Africa. It trades about 0.06 of its potential returns per unit of risk. VanEck Africa Index is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,562 in VanEck Africa Index on August 31, 2024 and sell it today you would earn a total of 43.00 from holding VanEck Africa Index or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. VanEck Africa Index
Performance |
| Timeline |
| Innovator ETFs Trust |
| VanEck Africa Index |
Innovator ETFs and VanEck Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and VanEck Africa
The main advantage of trading using opposite Innovator ETFs and VanEck Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, VanEck Africa 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 VanEck Africa will offset losses from the drop in VanEck Africa's long position.| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. FT Cboe Vest | Innovator ETFs vs. Innovator SP 500 |
| VanEck Africa vs. iShares MSCI South | VanEck Africa vs. VanEck Indonesia Index | VanEck Africa vs. iShares MSCI Thailand |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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