Correlation Between Innovator and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Innovator and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on Innovator and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and FT Cboe.
Diversification Opportunities for Innovator and FT Cboe
Poor diversification
The 3 months correlation between Innovator and XOCT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Innovator i.e., Innovator and FT Cboe go up and down completely randomly.
Pair Corralation between Innovator and FT Cboe
Given the investment horizon of 90 days Innovator SP 500 is expected to generate 2.18 times more return on investment than FT Cboe. However, Innovator is 2.18 times more volatile than FT Cboe Vest. It trades about 0.15 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.17 per unit of risk. If you would invest 3,680 in Innovator SP 500 on August 29, 2024 and sell it today you would earn a total of 460.00 from holding Innovator SP 500 or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP 500 vs. FT Cboe Vest
Performance |
| Timeline |
| Innovator SP 500 |
| FT Cboe Vest |
Innovator and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and FT Cboe
The main advantage of trading using opposite Innovator and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Innovator vs. Innovator SP 500 | Innovator vs. Innovator Equity Buffer | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
| FT Cboe vs. FT Vest Equity | FT Cboe vs. Northern Lights | FT Cboe vs. Dimensional International High | FT Cboe vs. First Trust Exchange Traded |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |