Correlation Between Innovator ETFs and Vanguard
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Vanguard 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 Vanguard 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 Vanguard SP Small Cap, you can compare the effects of market volatilities on Innovator ETFs and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Vanguard.
Diversification Opportunities for Innovator ETFs and Vanguard
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Vanguard SP Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Small 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 Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP Small has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Vanguard go up and down completely randomly.
Pair Corralation between Innovator ETFs and Vanguard
Given the investment horizon of 90 days Innovator ETFs is expected to generate 6.75 times less return on investment than Vanguard. But when comparing it to its historical volatility, Innovator ETFs Trust is 6.78 times less risky than Vanguard. It trades about 0.24 of its potential returns per unit of risk. Vanguard SP Small Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,252 in Vanguard SP Small Cap on August 31, 2024 and sell it today you would earn a total of 816.00 from holding Vanguard SP Small Cap or generate 8.82% 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. Vanguard SP Small Cap
Performance |
| Timeline |
| Innovator ETFs Trust |
| Vanguard SP Small |
Innovator ETFs and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and Vanguard
The main advantage of trading using opposite Innovator ETFs and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's 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 |
| Vanguard vs. Vanguard Small Cap Value | Vanguard vs. Dimensional Targeted Value | Vanguard vs. iShares SP Small Cap | Vanguard vs. SPDR SP 600 |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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