Correlation Between Innovator Equity and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Innovator Equity and Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs Trust, you can compare the effects of market volatilities on Innovator Equity and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and Innovator ETFs.
Diversification Opportunities for Innovator Equity and Innovator ETFs
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and Innovator is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Power and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Innovator Equity i.e., Innovator Equity and Innovator ETFs go up and down completely randomly.
Pair Corralation between Innovator Equity and Innovator ETFs
Given the investment horizon of 90 days Innovator Equity is expected to generate 1.46 times less return on investment than Innovator ETFs. But when comparing it to its historical volatility, Innovator Equity Power is 1.67 times less risky than Innovator ETFs. It trades about 0.44 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,947 in Innovator ETFs Trust on September 1, 2024 and sell it today you would earn a total of 131.00 from holding Innovator ETFs Trust or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innovator Equity Power vs. Innovator ETFs Trust
Performance |
| Timeline |
| Innovator Equity Power |
| Innovator ETFs Trust |
Innovator Equity and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Equity and Innovator ETFs
The main advantage of trading using opposite Innovator Equity and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity position performs unexpectedly, Innovator ETFs 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 ETFs will offset losses from the drop in Innovator ETFs' 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 |
| Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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