Correlation Between Innovator Nasdaq and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Innovator Nasdaq and Northern Lights 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 Nasdaq and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Nasdaq 100 Power and Northern Lights, you can compare the effects of market volatilities on Innovator Nasdaq and Northern Lights 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 Nasdaq with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Nasdaq and Northern Lights.
Diversification Opportunities for Innovator Nasdaq and Northern Lights
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and Northern is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Nasdaq 100 Power and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Innovator Nasdaq 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 Nasdaq 100 Power are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Innovator Nasdaq i.e., Innovator Nasdaq and Northern Lights go up and down completely randomly.
Pair Corralation between Innovator Nasdaq and Northern Lights
Given the investment horizon of 90 days Innovator Nasdaq 100 Power is expected to generate 0.69 times more return on investment than Northern Lights. However, Innovator Nasdaq 100 Power is 1.46 times less risky than Northern Lights. It trades about 0.11 of its potential returns per unit of risk. Northern Lights is currently generating about 0.06 per unit of risk. If you would invest 5,160 in Innovator Nasdaq 100 Power on August 26, 2024 and sell it today you would earn a total of 1,054 from holding Innovator Nasdaq 100 Power or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Nasdaq 100 Power vs. Northern Lights
Performance |
| Timeline |
| Innovator Nasdaq 100 |
| Northern Lights |
Innovator Nasdaq and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Nasdaq and Northern Lights
The main advantage of trading using opposite Innovator Nasdaq and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Nasdaq position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Innovator Nasdaq vs. First Trust Cboe | Innovator Nasdaq vs. FT Cboe Vest | Innovator Nasdaq vs. Innovator SP 500 | Innovator Nasdaq vs. FT Cboe Vest |
| Northern Lights vs. Northern Lights | Northern Lights vs. LHA Market State | Northern Lights vs. Innovator Nasdaq 100 Power | Northern Lights vs. ETF Series Solutions |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |