Correlation Between Innovator ETFs and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and JPMorgan BetaBuilders 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 ETFs and JPMorgan BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and JPMorgan BetaBuilders Small, you can compare the effects of market volatilities on Innovator ETFs and JPMorgan BetaBuilders 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 ETFs with a short position of JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and JPMorgan BetaBuilders.
Diversification Opportunities for Innovator ETFs and JPMorgan BetaBuilders
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and JPMorgan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and JPMorgan BetaBuilders Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders and Innovator ETFs 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 ETFs Trust are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between Innovator ETFs and JPMorgan BetaBuilders
Given the investment horizon of 90 days Innovator ETFs is expected to generate 5.47 times less return on investment than JPMorgan BetaBuilders. But when comparing it to its historical volatility, Innovator ETFs Trust is 6.37 times less risky than JPMorgan BetaBuilders. It trades about 0.27 of its potential returns per unit of risk. JPMorgan BetaBuilders Small is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 6,795 in JPMorgan BetaBuilders Small on August 29, 2024 and sell it today you would earn a total of 624.00 from holding JPMorgan BetaBuilders Small or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. JPMorgan BetaBuilders Small
Performance |
| Timeline |
| Innovator ETFs Trust |
| JPMorgan BetaBuilders |
Innovator ETFs and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and JPMorgan BetaBuilders
The main advantage of trading using opposite Innovator ETFs and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.| Innovator ETFs vs. Innovator Growth Accelerated | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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