Correlation Between Innovator and AAM Low
Can any of the company-specific risk be diversified away by investing in both Innovator and AAM Low 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 AAM Low 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 AAM Low Duration, you can compare the effects of market volatilities on Innovator and AAM Low 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 AAM Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and AAM Low.
Diversification Opportunities for Innovator and AAM Low
Very poor diversification
The 3 months correlation between Innovator and AAM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP Investment and AAM Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAM Low Duration 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 AAM Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAM Low Duration has no effect on the direction of Innovator i.e., Innovator and AAM Low go up and down completely randomly.
Pair Corralation between Innovator and AAM Low
Given the investment horizon of 90 days Innovator SP Investment is expected to generate 2.32 times more return on investment than AAM Low. However, Innovator is 2.32 times more volatile than AAM Low Duration. It trades about -0.03 of its potential returns per unit of risk. AAM Low Duration is currently generating about -0.13 per unit of risk. If you would invest 1,930 in Innovator SP Investment on August 30, 2024 and sell it today you would lose (11.00) from holding Innovator SP Investment or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Innovator SP Investment vs. AAM Low Duration
Performance |
| Timeline |
| Innovator SP Investment |
| AAM Low Duration |
Innovator and AAM Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and AAM Low
The main advantage of trading using opposite Innovator and AAM Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, AAM Low 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 AAM Low will offset losses from the drop in AAM Low's long position.| Innovator vs. ETFis Series Trust | Innovator vs. Global X Preferred | Innovator vs. VanEck Preferred Securities | Innovator vs. Global X SuperIncome |
| AAM Low vs. Global X Variable | AAM Low vs. ETFis Series Trust | AAM Low vs. Innovator SP Investment | AAM Low vs. Principal Spectrum Preferred |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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