Correlation Between VanEck Preferred and Innovator
Can any of the company-specific risk be diversified away by investing in both VanEck Preferred 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 VanEck Preferred and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Preferred Securities and Innovator SP Investment, you can compare the effects of market volatilities on VanEck Preferred 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 VanEck Preferred with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Preferred and Innovator.
Diversification Opportunities for VanEck Preferred and Innovator
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Innovator is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Preferred Securities 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 VanEck Preferred 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 VanEck Preferred Securities 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 VanEck Preferred i.e., VanEck Preferred and Innovator go up and down completely randomly.
Pair Corralation between VanEck Preferred and Innovator
Given the investment horizon of 90 days VanEck Preferred is expected to generate 1.02 times less return on investment than Innovator. But when comparing it to its historical volatility, VanEck Preferred Securities is 1.1 times less risky than Innovator. It trades about 0.07 of its potential returns per unit of risk. Innovator SP Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,679 in Innovator SP Investment on September 2, 2024 and sell it today you would earn a total of 255.00 from holding Innovator SP Investment or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Preferred Securities vs. Innovator SP Investment
Performance |
| Timeline |
| VanEck Preferred Sec |
| Innovator SP Investment |
VanEck Preferred and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Preferred and Innovator
The main advantage of trading using opposite VanEck Preferred and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Preferred 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.| VanEck Preferred vs. Global X SuperIncome | VanEck Preferred vs. SPDR ICE Preferred | VanEck Preferred vs. Invesco Preferred ETF | VanEck Preferred vs. Invesco Variable Rate |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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