Correlation Between First Trust and Innovator Loup
Can any of the company-specific risk be diversified away by investing in both First Trust and Innovator Loup 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 First Trust and Innovator Loup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and Innovator Loup Frontier, you can compare the effects of market volatilities on First Trust and Innovator Loup 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 First Trust with a short position of Innovator Loup. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Innovator Loup.
Diversification Opportunities for First Trust and Innovator Loup
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Innovator is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Innovator Loup Frontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Loup Frontier and First Trust 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 First Trust Nasdaq are associated (or correlated) with Innovator Loup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Loup Frontier has no effect on the direction of First Trust i.e., First Trust and Innovator Loup go up and down completely randomly.
Pair Corralation between First Trust and Innovator Loup
Given the investment horizon of 90 days First Trust is expected to generate 1.16 times less return on investment than Innovator Loup. But when comparing it to its historical volatility, First Trust Nasdaq is 1.17 times less risky than Innovator Loup. It trades about 0.3 of its potential returns per unit of risk. Innovator Loup Frontier is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,951 in Innovator Loup Frontier on September 1, 2024 and sell it today you would earn a total of 562.00 from holding Innovator Loup Frontier or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust Nasdaq vs. Innovator Loup Frontier
Performance |
| Timeline |
| First Trust Nasdaq |
| Innovator Loup Frontier |
First Trust and Innovator Loup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Innovator Loup
The main advantage of trading using opposite First Trust and Innovator Loup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Innovator Loup 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 Innovator Loup will offset losses from the drop in Innovator Loup's long position.| First Trust vs. Robo Global Robotics | First Trust vs. Robo Global Artificial | First Trust vs. Global X Robotics | First Trust vs. Direxion Daily Robotics |
| Innovator Loup vs. Nexalin Technology | Innovator Loup vs. Kilroy Realty Corp | Innovator Loup vs. Highwoods Properties | Innovator Loup vs. Karat Packaging |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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