Correlation Between Innovator ETFs and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on Innovator ETFs and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Freedom Day.
Diversification Opportunities for Innovator ETFs and Freedom Day
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and Freedom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Freedom Day go up and down completely randomly.
Pair Corralation between Innovator ETFs and Freedom Day
Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.73 times more return on investment than Freedom Day. However, Innovator ETFs Trust is 1.38 times less risky than Freedom Day. It trades about 0.26 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.01 per unit of risk. If you would invest 2,949 in Innovator ETFs Trust on November 28, 2024 and sell it today you would earn a total of 73.00 from holding Innovator ETFs Trust or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Freedom Day Dividend
Performance |
| Timeline |
| Innovator ETFs Trust |
| Freedom Day Dividend |
Innovator ETFs and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Freedom Day
The main advantage of trading using opposite Innovator ETFs and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| Innovator ETFs vs. JPMorgan Fundamental Data | Innovator ETFs vs. Matthews China Discovery | Innovator ETFs vs. Vanguard Mid Cap Index | Innovator ETFs vs. SPDR SP 400 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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