Correlation Between SPACE and Innovator Growth
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Innovator Growth.
Diversification Opportunities for SPACE and Innovator Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPACE and Innovator is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SPACE 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 SPACE 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 SPACE 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 SPACE i.e., SPACE and Innovator Growth go up and down completely randomly.
Pair Corralation between SPACE and Innovator Growth
Assuming the 90 days horizon SPACE is expected to generate 8.45 times more return on investment than Innovator Growth. However, SPACE is 8.45 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.17 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.16 per unit of risk. If you would invest 42.00 in SPACE on August 29, 2024 and sell it today you would earn a total of 8.00 from holding SPACE or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPACE vs. Innovator Growth 100 Accelerat
Performance |
| Timeline |
| SPACE |
| Innovator Growth 100 |
SPACE and Innovator Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Innovator Growth
The main advantage of trading using opposite SPACE and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and Innovator Growth 100 Accelerated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Innovator Growth vs. ABIVAX Socit Anonyme | Innovator Growth vs. Pinnacle Sherman Multi Strategy | Innovator Growth vs. Morningstar Unconstrained Allocation | Innovator Growth vs. SPACE |
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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