Correlation Between REX FANG and Innovator Growth
Can any of the company-specific risk be diversified away by investing in both REX FANG and Innovator Growth 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 REX FANG and Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REX FANG Innovation and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on REX FANG and Innovator Growth 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 REX FANG with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of REX FANG and Innovator Growth.
Diversification Opportunities for REX FANG and Innovator Growth
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between REX and Innovator is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding REX FANG Innovation and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and REX FANG 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 REX FANG Innovation are associated (or correlated) with Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of REX FANG i.e., REX FANG and Innovator Growth go up and down completely randomly.
Pair Corralation between REX FANG and Innovator Growth
Given the investment horizon of 90 days REX FANG is expected to generate 2.3 times less return on investment than Innovator Growth. But when comparing it to its historical volatility, REX FANG Innovation is 1.0 times less risky than Innovator Growth. It trades about 0.05 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,846 in Innovator Growth 100 Accelerated on October 25, 2024 and sell it today you would earn a total of 758.00 from holding Innovator Growth 100 Accelerated or generate 26.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.51% |
Values | Daily Returns |
REX FANG Innovation vs. Innovator Growth 100 Accelerat
Performance |
Timeline |
REX FANG Innovation |
Innovator Growth 100 |
REX FANG and Innovator Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with REX FANG and Innovator Growth
The main advantage of trading using opposite REX FANG and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REX FANG position performs unexpectedly, Innovator Growth 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 Growth will offset losses from the drop in Innovator Growth's long position.REX FANG vs. Freedom Day Dividend | REX FANG vs. Franklin Templeton ETF | REX FANG vs. iShares MSCI China | REX FANG vs. Tidal Trust II |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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