Correlation Between Innovator Equity and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Innovator Equity and KraneShares 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 Equity and KraneShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Equity Power and KraneShares Trust, you can compare the effects of market volatilities on Innovator Equity and KraneShares 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 Equity with a short position of KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and KraneShares Trust.
Diversification Opportunities for Innovator Equity and KraneShares Trust
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and KraneShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Power and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust and Innovator Equity 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 Equity Power are associated (or correlated) with KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of Innovator Equity i.e., Innovator Equity and KraneShares Trust go up and down completely randomly.
Pair Corralation between Innovator Equity and KraneShares Trust
Given the investment horizon of 90 days Innovator Equity Power is expected to generate 1.08 times more return on investment than KraneShares Trust. However, Innovator Equity is 1.08 times more volatile than KraneShares Trust. It trades about 0.13 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.1 per unit of risk. If you would invest 2,868 in Innovator Equity Power on August 27, 2024 and sell it today you would earn a total of 985.00 from holding Innovator Equity Power or generate 34.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.73% |
| Values | Daily Returns |
Innovator Equity Power vs. KraneShares Trust
Performance |
| Timeline |
| Innovator Equity Power |
| KraneShares Trust |
Innovator Equity and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Equity and KraneShares Trust
The main advantage of trading using opposite Innovator Equity and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity position performs unexpectedly, KraneShares 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 KraneShares Trust will offset losses from the drop in KraneShares Trust's long position.| Innovator Equity vs. FT Cboe Vest | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. FT Cboe Vest |
| KraneShares Trust vs. iShares Dividend and | KraneShares Trust vs. Martin Currie Sustainable | KraneShares Trust vs. VictoryShares THB Mid | KraneShares Trust vs. Mast Global Battery |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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