Correlation Between Innovator Equity and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Innovator Equity and AIM ETF 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 AIM ETF 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 AIM ETF Products, you can compare the effects of market volatilities on Innovator Equity and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and AIM ETF.
Diversification Opportunities for Innovator Equity and AIM ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Innovator and AIM is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Power and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Innovator Equity i.e., Innovator Equity and AIM ETF go up and down completely randomly.
Pair Corralation between Innovator Equity and AIM ETF
Given the investment horizon of 90 days Innovator Equity is expected to generate 1.03 times less return on investment than AIM ETF. But when comparing it to its historical volatility, Innovator Equity Power is 1.32 times less risky than AIM ETF. It trades about 0.44 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,169 in AIM ETF Products on September 1, 2024 and sell it today you would earn a total of 99.00 from holding AIM ETF Products or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innovator Equity Power vs. AIM ETF Products
Performance |
| Timeline |
| Innovator Equity Power |
| AIM ETF Products |
Innovator Equity and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Equity and AIM ETF
The main advantage of trading using opposite Innovator Equity and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF's long position.| Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 |
| AIM ETF vs. Innovator ETFs Trust | AIM ETF vs. First Trust Cboe | AIM ETF vs. Innovator SP 500 | AIM ETF 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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