Correlation Between NYSE Composite and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Innovator Equity 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 Equity 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 Equity Defined, you can compare the effects of market volatilities on NYSE Composite and Innovator Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Innovator Equity.
Diversification Opportunities for NYSE Composite and Innovator Equity
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Innovator Equity Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Defined 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Defined has no effect on the direction of NYSE Composite i.e., NYSE Composite and Innovator Equity go up and down completely randomly.
Pair Corralation between NYSE Composite and Innovator Equity
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.85 times more return on investment than Innovator Equity. However, NYSE Composite is 3.85 times more volatile than Innovator Equity Defined. It trades about 0.41 of its potential returns per unit of risk. Innovator Equity Defined is currently generating about 0.39 per unit of risk. If you would invest 1,925,354 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 101,850 from holding NYSE Composite or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Innovator Equity Defined
Performance |
| Timeline |
NYSE Composite and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Innovator Equity Defined
Pair trading matchups for Innovator Equity
Pair Trading with NYSE Composite and Innovator Equity
The main advantage of trading using opposite NYSE Composite and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Innovator Equity 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 Equity will offset losses from the drop in Innovator Equity'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 Equity vs. Innovator ETFs Trust | Innovator Equity vs. First Trust Cboe | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator Equity Power |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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