Correlation Between Innovator and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both Innovator and SPDR ICE 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 SPDR ICE 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 SPDR ICE Preferred, you can compare the effects of market volatilities on Innovator and SPDR ICE 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 SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and SPDR ICE.
Diversification Opportunities for Innovator and SPDR ICE
Almost no diversification
The 3 months correlation between Innovator and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP Investment and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of Innovator i.e., Innovator and SPDR ICE go up and down completely randomly.
Pair Corralation between Innovator and SPDR ICE
Given the investment horizon of 90 days Innovator SP Investment is expected to generate 1.16 times more return on investment than SPDR ICE. However, Innovator is 1.16 times more volatile than SPDR ICE Preferred. It trades about 0.08 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.08 per unit of risk. If you would invest 1,811 in Innovator SP Investment on September 5, 2024 and sell it today you would earn a total of 101.00 from holding Innovator SP Investment or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP Investment vs. SPDR ICE Preferred
Performance |
| Timeline |
| Innovator SP Investment |
| SPDR ICE Preferred |
Innovator and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and SPDR ICE
The main advantage of trading using opposite Innovator and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, SPDR ICE 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 SPDR ICE will offset losses from the drop in SPDR ICE's long position.| Innovator vs. SPDR ICE Preferred | Innovator vs. VanEck Preferred Securities | Innovator vs. Invesco Fundamental High |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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