Correlation Between Innovator ETFs and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Sprott Junior 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 Sprott Junior 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 Sprott Junior Copper, you can compare the effects of market volatilities on Innovator ETFs and Sprott Junior 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 Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Sprott Junior.
Diversification Opportunities for Innovator ETFs and Sprott Junior
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and Sprott is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Sprott Junior Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Copper 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 Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Copper has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Sprott Junior go up and down completely randomly.
Pair Corralation between Innovator ETFs and Sprott Junior
Given the investment horizon of 90 days Innovator ETFs is expected to generate 3.36 times less return on investment than Sprott Junior. But when comparing it to its historical volatility, Innovator ETFs Trust is 4.81 times less risky than Sprott Junior. It trades about 0.1 of its potential returns per unit of risk. Sprott Junior Copper is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,677 in Sprott Junior Copper on August 26, 2024 and sell it today you would earn a total of 543.00 from holding Sprott Junior Copper or generate 32.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Sprott Junior Copper
Performance |
| Timeline |
| Innovator ETFs Trust |
| Sprott Junior Copper |
Innovator ETFs and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Sprott Junior
The main advantage of trading using opposite Innovator ETFs and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Sprott Junior 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 Sprott Junior will offset losses from the drop in Sprott Junior's long position.The idea behind Innovator ETFs Trust and Sprott Junior Copper 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.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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