Correlation Between Innovator Growth and First Trust
Can any of the company-specific risk be diversified away by investing in both Innovator Growth and First Trust 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 Growth and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Growth 100 Power and First Trust Cboe, you can compare the effects of market volatilities on Innovator Growth and First Trust 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 Growth with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Growth and First Trust.
Diversification Opportunities for Innovator Growth and First Trust
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Growth 100 Power and First Trust Cboe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Cboe and Innovator Growth 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 Growth 100 Power are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Cboe has no effect on the direction of Innovator Growth i.e., Innovator Growth and First Trust go up and down completely randomly.
Pair Corralation between Innovator Growth and First Trust
Given the investment horizon of 90 days Innovator Growth is expected to generate 1.1 times less return on investment than First Trust. In addition to that, Innovator Growth is 1.45 times more volatile than First Trust Cboe. It trades about 0.12 of its total potential returns per unit of risk. First Trust Cboe is currently generating about 0.18 per unit of volatility. If you would invest 3,004 in First Trust Cboe on August 25, 2024 and sell it today you would earn a total of 46.00 from holding First Trust Cboe or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Growth 100 Power vs. First Trust Cboe
Performance |
| Timeline |
| Innovator Growth 100 |
| First Trust Cboe |
Innovator Growth and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Growth and First Trust
The main advantage of trading using opposite Innovator Growth and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Growth position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Innovator Growth vs. First Trust Cboe | Innovator Growth vs. FT Cboe Vest | Innovator Growth vs. Innovator SP 500 | Innovator Growth vs. Innovator Equity Power |
| First Trust vs. FT Cboe Vest | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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