Correlation Between ETF Series and Innovator Nasdaq
Can any of the company-specific risk be diversified away by investing in both ETF Series and Innovator Nasdaq 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 ETF Series and Innovator Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Innovator Nasdaq 100 Power, you can compare the effects of market volatilities on ETF Series and Innovator Nasdaq 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 ETF Series with a short position of Innovator Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Innovator Nasdaq.
Diversification Opportunities for ETF Series and Innovator Nasdaq
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ETF and Innovator is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and Innovator Nasdaq 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Nasdaq 100 and ETF Series 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 ETF Series Solutions are associated (or correlated) with Innovator Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Nasdaq 100 has no effect on the direction of ETF Series i.e., ETF Series and Innovator Nasdaq go up and down completely randomly.
Pair Corralation between ETF Series and Innovator Nasdaq
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.55 times more return on investment than Innovator Nasdaq. However, ETF Series is 1.55 times more volatile than Innovator Nasdaq 100 Power. It trades about 0.09 of its potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.14 per unit of risk. If you would invest 3,428 in ETF Series Solutions on August 29, 2024 and sell it today you would earn a total of 53.00 from holding ETF Series Solutions or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Innovator Nasdaq 100 Power
Performance |
| Timeline |
| ETF Series Solutions |
| Innovator Nasdaq 100 |
ETF Series and Innovator Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Innovator Nasdaq
The main advantage of trading using opposite ETF Series and Innovator Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, Innovator Nasdaq 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 Nasdaq will offset losses from the drop in Innovator Nasdaq's long position.| ETF Series vs. Alpha Architect Quantitative | ETF Series vs. Alpha Architect International | ETF Series vs. Alpha Architect International | ETF Series vs. Alpha Architect Quantitative |
| Innovator Nasdaq vs. ABIVAX Socit Anonyme | Innovator Nasdaq vs. Pinnacle Sherman Multi Strategy | Innovator Nasdaq vs. Morningstar Unconstrained Allocation | Innovator Nasdaq vs. SPACE |
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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