Correlation Between Innovator and PGIM Large
Can any of the company-specific risk be diversified away by investing in both Innovator and PGIM Large 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 and PGIM Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator SP 500 and PGIM Large Cap Buffer, you can compare the effects of market volatilities on Innovator and PGIM Large 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 with a short position of PGIM Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and PGIM Large.
Diversification Opportunities for Innovator and PGIM Large
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Innovator and PGIM is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and PGIM Large Cap Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Large Cap and Innovator 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 SP 500 are associated (or correlated) with PGIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Large Cap has no effect on the direction of Innovator i.e., Innovator and PGIM Large go up and down completely randomly.
Pair Corralation between Innovator and PGIM Large
Given the investment horizon of 90 days Innovator is expected to generate 1.01 times less return on investment than PGIM Large. In addition to that, Innovator is 1.2 times more volatile than PGIM Large Cap Buffer. It trades about 0.13 of its total potential returns per unit of risk. PGIM Large Cap Buffer is currently generating about 0.15 per unit of volatility. If you would invest 2,522 in PGIM Large Cap Buffer on August 26, 2024 and sell it today you would earn a total of 299.00 from holding PGIM Large Cap Buffer or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 41.65% |
| Values | Daily Returns |
Innovator SP 500 vs. PGIM Large Cap Buffer
Performance |
| Timeline |
| Innovator SP 500 |
| PGIM Large Cap |
Innovator and PGIM Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and PGIM Large
The main advantage of trading using opposite Innovator and PGIM Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, PGIM Large 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 PGIM Large will offset losses from the drop in PGIM Large's long position.| Innovator vs. First Trust Cboe | Innovator vs. FT Cboe Vest | Innovator vs. Innovator SP 500 | Innovator vs. FT Cboe Vest |
| PGIM Large vs. First Trust Cboe | PGIM Large vs. FT Cboe Vest | PGIM Large vs. Innovator SP 500 | PGIM Large vs. FT Cboe Vest |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |