Correlation Between Vanguard Growth and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth and Innovator ETFs 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 Vanguard Growth and Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and Innovator ETFs Trust, you can compare the effects of market volatilities on Vanguard Growth and Innovator ETFs 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 Vanguard Growth with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Innovator ETFs.
Diversification Opportunities for Vanguard Growth and Innovator ETFs
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Innovator is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Vanguard Growth 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 Vanguard Growth Index are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Innovator ETFs go up and down completely randomly.
Pair Corralation between Vanguard Growth and Innovator ETFs
Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 4.2 times more return on investment than Innovator ETFs. However, Vanguard Growth is 4.2 times more volatile than Innovator ETFs Trust. It trades about 0.13 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.14 per unit of risk. If you would invest 22,556 in Vanguard Growth Index on November 1, 2024 and sell it today you would earn a total of 19,427 from holding Vanguard Growth Index or generate 86.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 83.76% |
| Values | Daily Returns |
Vanguard Growth Index vs. Innovator ETFs Trust
Performance |
| Timeline |
| Vanguard Growth Index |
| Innovator ETFs Trust |
Vanguard Growth and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Innovator ETFs
The main advantage of trading using opposite Vanguard Growth and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth position performs unexpectedly, Innovator ETFs 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 ETFs will offset losses from the drop in Innovator ETFs' long position.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Information Technology | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard Dividend Appreciation |
| Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator Equity Power |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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