Correlation Between Global X and Innovator
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Variable and Innovator SP Investment, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Innovator.
Diversification Opportunities for Global X and Innovator
Very weak diversification
The 3 months correlation between Global and Innovator is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Global X Variable and Innovator SP Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP Investment and Global X 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 Global X Variable 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 Investment has no effect on the direction of Global X i.e., Global X and Innovator go up and down completely randomly.
Pair Corralation between Global X and Innovator
Given the investment horizon of 90 days Global X Variable is expected to generate 0.68 times more return on investment than Innovator. However, Global X Variable is 1.47 times less risky than Innovator. It trades about 0.12 of its potential returns per unit of risk. Innovator SP Investment is currently generating about 0.06 per unit of risk. If you would invest 2,015 in Global X Variable on September 2, 2024 and sell it today you would earn a total of 427.00 from holding Global X Variable or generate 21.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Variable vs. Innovator SP Investment
Performance |
| Timeline |
| Global X Variable |
| Innovator SP Investment |
Global X and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Innovator
The main advantage of trading using opposite Global X and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.The idea behind Global X Variable and Innovator SP Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Innovator vs. ETFis Series Trust | Innovator vs. Global X Preferred | Innovator vs. VanEck Preferred Securities | Innovator vs. Global X SuperIncome |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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