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 Power, 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
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Innovator and Innovator is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Equity Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Power 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 Power 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 is expected to generate 1.14 times less return on investment than Innovator Equity. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.12 times less risky than Innovator Equity. It trades about 0.13 of its potential returns per unit of risk. Innovator Equity Power is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,868 in Innovator Equity Power on August 27, 2024 and sell it today you would earn a total of 985.00 from holding Innovator Equity Power or generate 34.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 54.23% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Innovator Equity Power
Performance |
| Timeline |
| Innovator ETFs Trust |
| Innovator Equity Power |
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. Tidal Trust II | Innovator ETFs vs. Tidal Trust II | Innovator ETFs vs. First Trust Dorsey | Innovator ETFs vs. Direxion Daily META |
| Innovator Equity vs. FT Cboe Vest | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. FT Cboe Vest |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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