Correlation Between Innovator ETFs and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on Innovator ETFs and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and FT Cboe.
Diversification Opportunities for Innovator ETFs and FT Cboe
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innovator and FFEB is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and FT Cboe go up and down completely randomly.
Pair Corralation between Innovator ETFs and FT Cboe
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.37 times less return on investment than FT Cboe. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.15 times less risky than FT Cboe. It trades about 0.13 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,759 in FT Cboe Vest on August 31, 2024 and sell it today you would earn a total of 1,228 from holding FT Cboe Vest or generate 32.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.04% |
| Values | Daily Returns |
Innovator ETFs Trust vs. FT Cboe Vest
Performance |
| Timeline |
| Innovator ETFs Trust |
| FT Cboe Vest |
Innovator ETFs and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and FT Cboe
The main advantage of trading using opposite Innovator ETFs and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe'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 |
| FT Cboe vs. Innovator ETFs Trust | FT Cboe vs. First Trust Cboe | FT Cboe vs. FT Cboe Vest | FT Cboe 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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