Correlation Between Innovator Growth and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both Innovator Growth and Innovator Equity 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 Growth and Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Growth 100 Accelerated and Innovator Equity Accelerated, you can compare the effects of market volatilities on Innovator Growth and Innovator Equity 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 Growth with a short position of Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Growth and Innovator Equity.
Diversification Opportunities for Innovator Growth and Innovator Equity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Innovator and Innovator is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Growth 100 Accelerat and Innovator Equity Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Acc and Innovator 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 Innovator Growth 100 Accelerated are associated (or correlated) with Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Acc has no effect on the direction of Innovator Growth i.e., Innovator Growth and Innovator Equity go up and down completely randomly.
Pair Corralation between Innovator Growth and Innovator Equity
Given the investment horizon of 90 days Innovator Growth 100 Accelerated is expected to generate 2.12 times more return on investment than Innovator Equity. However, Innovator Growth is 2.12 times more volatile than Innovator Equity Accelerated. It trades about 0.16 of its potential returns per unit of risk. Innovator Equity Accelerated is currently generating about 0.2 per unit of risk. If you would invest 3,249 in Innovator Growth 100 Accelerated on August 28, 2024 and sell it today you would earn a total of 105.00 from holding Innovator Growth 100 Accelerated or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Innovator Growth 100 Accelerat vs. Innovator Equity Accelerated
Performance |
| Timeline |
| Innovator Growth 100 |
| Innovator Equity Acc |
Innovator Growth and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Growth and Innovator Equity
The main advantage of trading using opposite Innovator Growth and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Growth position performs unexpectedly, Innovator Equity 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 Equity will offset losses from the drop in Innovator Equity's long position.| Innovator Growth vs. Direxion Daily SP | Innovator Growth vs. Direxion Daily Semiconductor | Innovator Growth vs. Direxion Daily Semiconductor |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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