Correlation Between Innovator and FT Vest
Can any of the company-specific risk be diversified away by investing in both Innovator and FT Vest 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 Vest 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 Vest NASDAQ 100, you can compare the effects of market volatilities on Innovator and FT Vest 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 Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and FT Vest.
Diversification Opportunities for Innovator and FT Vest
No risk reduction
The 3 months correlation between Innovator and QCAP is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and FT Vest NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest NASDAQ 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 Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest NASDAQ has no effect on the direction of Innovator i.e., Innovator and FT Vest go up and down completely randomly.
Pair Corralation between Innovator and FT Vest
Given the investment horizon of 90 days Innovator is expected to generate 1.28 times less return on investment than FT Vest. But when comparing it to its historical volatility, Innovator SP 500 is 1.11 times less risky than FT Vest. It trades about 0.14 of its potential returns per unit of risk. FT Vest NASDAQ 100 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,005 in FT Vest NASDAQ 100 on September 1, 2024 and sell it today you would earn a total of 200.00 from holding FT Vest NASDAQ 100 or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 34.29% |
| Values | Daily Returns |
Innovator SP 500 vs. FT Vest NASDAQ 100
Performance |
| Timeline |
| Innovator SP 500 |
| FT Vest NASDAQ |
Innovator and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and FT Vest
The main advantage of trading using opposite Innovator and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator position performs unexpectedly, FT Vest 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 Vest will offset losses from the drop in FT Vest's long position.| Innovator vs. Innovator ETFs Trust | Innovator vs. First Trust Cboe | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. Matthews China Discovery |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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