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 500, 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
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Innovator is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 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 500 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 2.1 times more return on investment than Innovator. However, NYSE Composite is 2.1 times more volatile than Innovator SP 500. It trades about 0.08 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.16 per unit of risk. If you would invest 1,546,867 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 474,115 from holding NYSE Composite or generate 30.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Innovator SP 500
Performance |
| Timeline |
NYSE Composite and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Innovator SP 500
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. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Innovator vs. Innovator ETFs Trust | Innovator vs. First Trust Cboe | Innovator vs. FT Cboe Vest | Innovator vs. Innovator SP 500 |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |