Correlation Between Innovator ETFs and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator Equity 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 ETFs and Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and Innovator Equity Buffer, you can compare the effects of market volatilities on Innovator ETFs and Innovator Equity 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 ETFs with a short position of Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator Equity.
Diversification Opportunities for Innovator ETFs and Innovator Equity
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innovator and Innovator is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Equity Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Buffer and Innovator ETFs 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 ETFs Trust are associated (or correlated) with Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Buffer has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Equity go up and down completely randomly.
Pair Corralation between Innovator ETFs and Innovator Equity
Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the Innovator Equity. In addition to that, Innovator ETFs is 1.11 times more volatile than Innovator Equity Buffer. It trades about -0.04 of its total potential returns per unit of risk. Innovator Equity Buffer is currently generating about 0.37 per unit of volatility. If you would invest 4,354 in Innovator Equity Buffer on September 2, 2024 and sell it today you would earn a total of 165.00 from holding Innovator Equity Buffer or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Innovator Equity Buffer
Performance |
| Timeline |
| Innovator ETFs Trust |
| Innovator Equity Buffer |
Innovator ETFs and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Innovator Equity
The main advantage of trading using opposite Innovator ETFs and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Innovator Equity 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 Equity will offset losses from the drop in Innovator Equity's long position.| Innovator ETFs vs. ProShares Ultra MSCI | Innovator ETFs vs. ProShares UltraShort MSCI | Innovator ETFs vs. SWP Growth Income | Innovator ETFs vs. Invesco DB Dollar |
| Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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