Correlation Between Innovator ETFs and Innovator Small
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Innovator ETFs and Innovator Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator Small.
Diversification Opportunities for Innovator ETFs and Innovator Small
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innovator and Innovator is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Small Cap has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Small go up and down completely randomly.
Pair Corralation between Innovator ETFs and Innovator Small
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.85 times less return on investment than Innovator Small. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.37 times less risky than Innovator Small. It trades about 0.13 of its potential returns per unit of risk. Innovator Small Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,493 in Innovator Small Cap on September 3, 2024 and sell it today you would earn a total of 172.00 from holding Innovator Small Cap or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.44% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Innovator Small Cap
Performance |
| Timeline |
| Innovator ETFs Trust |
| Innovator Small Cap |
Innovator ETFs and Innovator Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Innovator Small
The main advantage of trading using opposite Innovator ETFs and Innovator Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Innovator Small 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 Small will offset losses from the drop in Innovator Small'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 Small vs. Innovator ETFs Trust | Innovator Small vs. First Trust Cboe | Innovator Small vs. FT Cboe Vest | Innovator Small 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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