Correlation Between Innovator ETFs and First Trust
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and First Trust 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 First Trust 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 First Trust Exchange, you can compare the effects of market volatilities on Innovator ETFs and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and First Trust.
Diversification Opportunities for Innovator ETFs and First Trust
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innovator and First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and First Trust Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and First Trust go up and down completely randomly.
Pair Corralation between Innovator ETFs and First Trust
Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the First Trust. In addition to that, Innovator ETFs is 3.31 times more volatile than First Trust Exchange. It trades about -0.05 of its total potential returns per unit of risk. First Trust Exchange is currently generating about 0.45 per unit of volatility. If you would invest 3,556 in First Trust Exchange on September 3, 2024 and sell it today you would earn a total of 54.00 from holding First Trust Exchange or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. First Trust Exchange
Performance |
| Timeline |
| Innovator ETFs Trust |
| First Trust Exchange |
Innovator ETFs and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and First Trust
The main advantage of trading using opposite Innovator ETFs and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. JPMorgan Fundamental Data |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |