Correlation Between Innovator and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both Innovator and IShares IBonds 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 IShares IBonds 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 iShares iBonds Dec, you can compare the effects of market volatilities on Innovator and IShares IBonds 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 IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and IShares IBonds.
Diversification Opportunities for Innovator and IShares IBonds
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innovator and IShares is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of Innovator i.e., Innovator and IShares IBonds go up and down completely randomly.
Pair Corralation between Innovator and IShares IBonds
Given the investment horizon of 90 days Innovator SP 500 is expected to generate 0.76 times more return on investment than IShares IBonds. However, Innovator SP 500 is 1.32 times less risky than IShares IBonds. It trades about 0.22 of its potential returns per unit of risk. iShares iBonds Dec is currently generating about -0.06 per unit of risk. If you would invest 4,071 in Innovator SP 500 on November 2, 2024 and sell it today you would earn a total of 226.00 from holding Innovator SP 500 or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Innovator SP 500 vs. iShares iBonds Dec
Performance |
| Timeline |
| Innovator SP 500 |
| iShares iBonds Dec |
Innovator and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and IShares IBonds
The main advantage of trading using opposite Innovator and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, IShares IBonds 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 IShares IBonds will offset losses from the drop in IShares IBonds' long position.| Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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