Correlation Between Innovator and KraneShares Trust
Can any of the company-specific risk be diversified away by investing in both Innovator and KraneShares Trust 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 KraneShares Trust 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 KraneShares Trust, you can compare the effects of market volatilities on Innovator and KraneShares Trust 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 KraneShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and KraneShares Trust.
Diversification Opportunities for Innovator and KraneShares Trust
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and KraneShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and KraneShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Trust 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 KraneShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Trust has no effect on the direction of Innovator i.e., Innovator and KraneShares Trust go up and down completely randomly.
Pair Corralation between Innovator and KraneShares Trust
Given the investment horizon of 90 days Innovator is expected to generate 1.06 times less return on investment than KraneShares Trust. But when comparing it to its historical volatility, Innovator SP 500 is 1.14 times less risky than KraneShares Trust. It trades about 0.11 of its potential returns per unit of risk. KraneShares Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,479 in KraneShares Trust on August 23, 2024 and sell it today you would earn a total of 232.00 from holding KraneShares Trust or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.32% |
| Values | Daily Returns |
Innovator SP 500 vs. KraneShares Trust
Performance |
| Timeline |
| Innovator SP 500 |
| KraneShares Trust |
Innovator and KraneShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and KraneShares Trust
The main advantage of trading using opposite Innovator and KraneShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, KraneShares Trust 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 KraneShares Trust will offset losses from the drop in KraneShares Trust's long position.| Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
| KraneShares Trust vs. Innovator ETFs Trust | KraneShares Trust vs. First Trust Cboe | KraneShares Trust vs. FT Cboe Vest | KraneShares Trust vs. Innovator SP 500 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |