Correlation Between IPath Series and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both IPath Series and Innovator Capital 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 IPath Series and Innovator Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and Innovator Capital Management, you can compare the effects of market volatilities on IPath Series and Innovator Capital 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 IPath Series with a short position of Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Innovator Capital.
Diversification Opportunities for IPath Series and Innovator Capital
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPath and Innovator is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital and IPath Series 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 iPath Series B are associated (or correlated) with Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of IPath Series i.e., IPath Series and Innovator Capital go up and down completely randomly.
Pair Corralation between IPath Series and Innovator Capital
Considering the 90-day investment horizon iPath Series B is expected to under-perform the Innovator Capital. In addition to that, IPath Series is 21.64 times more volatile than Innovator Capital Management. It trades about -0.04 of its total potential returns per unit of risk. Innovator Capital Management is currently generating about 0.32 per unit of volatility. If you would invest 3,018 in Innovator Capital Management on September 2, 2024 and sell it today you would earn a total of 59.00 from holding Innovator Capital Management or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.06% |
| Values | Daily Returns |
iPath Series B vs. Innovator Capital Management
Performance |
| Timeline |
| iPath Series B |
| Innovator Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IPath Series and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and Innovator Capital
The main advantage of trading using opposite IPath Series and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, Innovator Capital 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 Capital will offset losses from the drop in Innovator Capital's long position.| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 Year |
| Innovator Capital vs. ProShares VIX Mid Term | Innovator Capital vs. iPath Series B | Innovator Capital vs. ProShares Short Russell2000 |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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