Correlation Between Innovator ETFs and Innovator
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator 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 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 SP 500, you can compare the effects of market volatilities on Innovator ETFs and Innovator 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator.
Diversification Opportunities for Innovator ETFs and Innovator
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Innovator and Innovator is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator go up and down completely randomly.
Pair Corralation between Innovator ETFs and Innovator
Given the investment horizon of 90 days Innovator ETFs is expected to generate 4.73 times less return on investment than Innovator. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.04 times less risky than Innovator. It trades about 0.03 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,856 in Innovator SP 500 on August 24, 2024 and sell it today you would earn a total of 254.00 from holding Innovator SP 500 or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. Innovator SP 500
Performance |
| Timeline |
| Innovator ETFs Trust |
| Innovator SP 500 |
Innovator ETFs and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Innovator
The main advantage of trading using opposite Innovator ETFs and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Innovator 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 will offset losses from the drop in Innovator's long position.| Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator MSCI EAFE | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust |
| Innovator vs. Innovator SP 500 | Innovator vs. Innovator Equity Buffer | Innovator vs. Innovator SP 500 | Innovator 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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