Correlation Between ETF Series and Innovator
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and Innovator 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 SP Investment, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Innovator.
Diversification Opportunities for ETF Series and Innovator
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ETF and Innovator is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and Innovator SP Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP Investment 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. 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 Investment has no effect on the direction of ETF Series i.e., ETF Series and Innovator go up and down completely randomly.
Pair Corralation between ETF Series and Innovator
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.54 times more return on investment than Innovator. However, ETF Series is 1.54 times more volatile than Innovator SP Investment. It trades about 0.02 of its potential returns per unit of risk. Innovator SP Investment is currently generating about -0.05 per unit of risk. If you would invest 3,337 in ETF Series Solutions on August 31, 2024 and sell it today you would earn a total of 8.00 from holding ETF Series Solutions or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Innovator SP Investment
Performance |
| Timeline |
| ETF Series Solutions |
| Innovator SP Investment |
ETF Series and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Innovator
The main advantage of trading using opposite ETF Series and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. Vanguard Minimum Volatility | ETF Series vs. ProShares VIX Mid Term | ETF Series vs. ProShares VIX Short Term | ETF Series vs. LHA Market State |
| Innovator vs. ETFis Series Trust | Innovator vs. Global X Preferred | Innovator vs. VanEck Preferred Securities | Innovator vs. Global X SuperIncome |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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