Correlation Between NYSE Composite and Innovator Premium
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Innovator Premium 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 Premium 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 Premium Income, you can compare the effects of market volatilities on NYSE Composite and Innovator Premium 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 Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Innovator Premium.
Diversification Opportunities for NYSE Composite and Innovator Premium
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Innovator is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Innovator Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Premium Income 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 Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Premium Income has no effect on the direction of NYSE Composite i.e., NYSE Composite and Innovator Premium go up and down completely randomly.
Pair Corralation between NYSE Composite and Innovator Premium
Assuming the 90 days trading horizon NYSE Composite is expected to generate 7.04 times more return on investment than Innovator Premium. However, NYSE Composite is 7.04 times more volatile than Innovator Premium Income. It trades about 0.08 of its potential returns per unit of risk. Innovator Premium Income is currently generating about 0.22 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.19% |
| Values | Daily Returns |
NYSE Composite vs. Innovator Premium Income
Performance |
| Timeline |
NYSE Composite and Innovator Premium Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Innovator Premium Income
Pair trading matchups for Innovator Premium
Pair Trading with NYSE Composite and Innovator Premium
The main advantage of trading using opposite NYSE Composite and Innovator Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Innovator Premium 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 Premium will offset losses from the drop in Innovator Premium's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Innovator Premium vs. FT Vest Equity | Innovator Premium vs. Northern Lights | Innovator Premium vs. Dimensional International High | Innovator Premium vs. First Trust Exchange Traded |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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