Correlation Between NYSE Composite and Innovator
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Innovator SP Investment, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Innovator.
Diversification Opportunities for NYSE Composite and Innovator
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Innovator is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Innovator go up and down completely randomly.
Pair Corralation between NYSE Composite and Innovator
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.02 times more return on investment than Innovator. However, NYSE Composite is 1.02 times more volatile than Innovator SP Investment. It trades about 0.17 of its potential returns per unit of risk. Innovator SP Investment is currently generating about 0.08 per unit of risk. If you would invest 1,901,742 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 125,462 from holding NYSE Composite or generate 6.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Innovator SP Investment
Performance |
| Timeline |
NYSE Composite and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Innovator SP Investment
Pair trading matchups for Innovator
Pair Trading with NYSE Composite and Innovator
The main advantage of trading using opposite NYSE Composite and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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