Correlation Between Innovator and AllianzIM Equity
Can any of the company-specific risk be diversified away by investing in both Innovator and AllianzIM Equity 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 AllianzIM Equity 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 AllianzIM Equity Buffer15, you can compare the effects of market volatilities on Innovator and AllianzIM Equity 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 AllianzIM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and AllianzIM Equity.
Diversification Opportunities for Innovator and AllianzIM Equity
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and AllianzIM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and AllianzIM Equity Buffer15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Equity Buffer15 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 AllianzIM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Equity Buffer15 has no effect on the direction of Innovator i.e., Innovator and AllianzIM Equity go up and down completely randomly.
Pair Corralation between Innovator and AllianzIM Equity
Given the investment horizon of 90 days Innovator is expected to generate 2.26 times less return on investment than AllianzIM Equity. But when comparing it to its historical volatility, Innovator SP 500 is 4.29 times less risky than AllianzIM Equity. It trades about 0.28 of its potential returns per unit of risk. AllianzIM Equity Buffer15 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,706 in AllianzIM Equity Buffer15 on August 25, 2024 and sell it today you would earn a total of 61.00 from holding AllianzIM Equity Buffer15 or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP 500 vs. AllianzIM Equity Buffer15
Performance |
| Timeline |
| Innovator SP 500 |
| AllianzIM Equity Buffer15 |
Innovator and AllianzIM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and AllianzIM Equity
The main advantage of trading using opposite Innovator and AllianzIM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, AllianzIM Equity 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 AllianzIM Equity will offset losses from the drop in AllianzIM Equity's long position.| Innovator vs. First Trust Cboe | Innovator vs. FT Cboe Vest | Innovator vs. Innovator SP 500 | Innovator vs. Innovator Equity Power |
| AllianzIM Equity vs. First Trust Cboe | AllianzIM Equity vs. FT Cboe Vest | AllianzIM Equity vs. Innovator SP 500 | AllianzIM Equity 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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