Correlation Between Innovator Russell and Innovator
Can any of the company-specific risk be diversified away by investing in both Innovator Russell 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 Russell and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Russell 2000 and Innovator SP 500, you can compare the effects of market volatilities on Innovator Russell 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 Russell with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Russell and Innovator.
Diversification Opportunities for Innovator Russell and Innovator
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and Innovator is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Russell 2000 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 Russell 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 Russell 2000 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 Russell i.e., Innovator Russell and Innovator go up and down completely randomly.
Pair Corralation between Innovator Russell and Innovator
Given the investment horizon of 90 days Innovator Russell 2000 is expected to generate 1.52 times more return on investment than Innovator. However, Innovator Russell is 1.52 times more volatile than Innovator SP 500. It trades about 0.16 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.17 per unit of risk. If you would invest 2,909 in Innovator Russell 2000 on August 28, 2024 and sell it today you would earn a total of 116.00 from holding Innovator Russell 2000 or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Russell 2000 vs. Innovator SP 500
Performance |
| Timeline |
| Innovator Russell 2000 |
| Innovator SP 500 |
Innovator Russell and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Russell and Innovator
The main advantage of trading using opposite Innovator Russell and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Russell 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 Russell vs. Innovator Nasdaq 100 Power | Innovator Russell vs. Innovator Russell 2000 | Innovator Russell vs. Innovator Nasdaq 100 Power | Innovator Russell vs. Innovator Growth 100 Power |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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