Correlation Between Innovator and Innovator Premium

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Can any of the company-specific risk be diversified away by investing in both Innovator and Innovator Premium 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 Innovator Premium 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 Innovator Premium Income, you can compare the effects of market volatilities on Innovator and Innovator Premium 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 Innovator Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Innovator Premium.

Diversification Opportunities for Innovator and Innovator Premium

InnovatorInnovatorDiversified AwayInnovatorInnovatorDiversified Away100%
0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Innovator and Innovator is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and Innovator Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Premium Income 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 Innovator Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Premium Income has no effect on the direction of Innovator i.e., Innovator and Innovator Premium go up and down completely randomly.

Pair Corralation between Innovator and Innovator Premium

Given the investment horizon of 90 days Innovator SP 500 is expected to under-perform the Innovator Premium. In addition to that, Innovator is 4.99 times more volatile than Innovator Premium Income. It trades about -0.03 of its total potential returns per unit of risk. Innovator Premium Income is currently generating about 0.12 per unit of volatility. If you would invest  2,487  in Innovator Premium Income on December 3, 2024 and sell it today you would earn a total of  15.50  from holding Innovator Premium Income or generate 0.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Innovator SP 500  vs.  Innovator Premium Income

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1.5-1.0-0.50.00.51.01.5
JavaScript chart by amCharts 3.21.15PJUL HAPR
       Timeline  
Innovator SP 500 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Innovator SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Innovator is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar40.84141.241.441.641.84242.242.4
Innovator Premium Income 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Premium Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Premium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar24.8524.924.952525.0525.125.15

Innovator and Innovator Premium Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.33-0.98-0.63-0.28-0.0056120.250.60.951.31.65 1020304050
JavaScript chart by amCharts 3.21.15PJUL HAPR
       Returns  

Pair Trading with Innovator and Innovator Premium

The main advantage of trading using opposite Innovator and Innovator Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, Innovator Premium 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 Premium will offset losses from the drop in Innovator Premium's long position.
The idea behind Innovator SP 500 and Innovator Premium Income 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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