Correlation Between Lumia and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Lumia and Innovator ETFs 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 Lumia and Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Innovator ETFs Trust, you can compare the effects of market volatilities on Lumia and Innovator ETFs 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 Lumia with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Innovator ETFs.
Diversification Opportunities for Lumia and Innovator ETFs
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lumia and Innovator is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Lumia 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 Lumia are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Lumia i.e., Lumia and Innovator ETFs go up and down completely randomly.
Pair Corralation between Lumia and Innovator ETFs
Assuming the 90 days trading horizon Lumia is expected to generate 259.78 times more return on investment than Innovator ETFs. However, Lumia is 259.78 times more volatile than Innovator ETFs Trust. It trades about 0.12 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.02 per unit of risk. If you would invest 0.00 in Lumia on November 2, 2024 and sell it today you would earn a total of 91.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Lumia vs. Innovator ETFs Trust
Performance |
| Timeline |
| Lumia |
| Innovator ETFs Trust |
Lumia and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Innovator ETFs
The main advantage of trading using opposite Lumia and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Innovator ETFs 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 ETFs will offset losses from the drop in Innovator ETFs' long position.The idea behind Lumia and Innovator ETFs Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator MSCI Emerging | Innovator ETFs vs. Innovator Russell 2000 | Innovator ETFs vs. Innovator MSCI Emerging |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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