Correlation Between Innovator and Global X
Can any of the company-specific risk be diversified away by investing in both Innovator and Global X 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 and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator SP Investment and Global X Variable, you can compare the effects of market volatilities on Innovator and Global X 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 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Global X.
Diversification Opportunities for Innovator and Global X
Weak diversification
The 3 months correlation between Innovator and Global is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP Investment and Global X Variable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Variable and Innovator 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 SP Investment are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Variable has no effect on the direction of Innovator i.e., Innovator and Global X go up and down completely randomly.
Pair Corralation between Innovator and Global X
Given the investment horizon of 90 days Innovator SP Investment is expected to under-perform the Global X. In addition to that, Innovator is 2.1 times more volatile than Global X Variable. It trades about -0.09 of its total potential returns per unit of risk. Global X Variable is currently generating about 0.04 per unit of volatility. If you would invest 2,397 in Global X Variable on November 28, 2024 and sell it today you would earn a total of 6.00 from holding Global X Variable or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP Investment vs. Global X Variable
Performance |
| Timeline |
| Innovator SP Investment |
| Global X Variable |
Innovator and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and Global X
The main advantage of trading using opposite Innovator and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Innovator vs. ETFis Series Trust | Innovator vs. Global X Preferred | Innovator vs. VanEck Preferred Securities | Innovator vs. Global X SuperIncome |
| Global X vs. Global X Preferred | Global X vs. Global X Emerging | Global X vs. Global X Alternative | Global X vs. Global X SP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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