Correlation Between Innovator ETFs and IndexIQ ETF
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and IndexIQ ETF 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 IndexIQ ETF 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 IndexIQ ETF Trust, you can compare the effects of market volatilities on Innovator ETFs and IndexIQ ETF 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 IndexIQ ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and IndexIQ ETF.
Diversification Opportunities for Innovator ETFs and IndexIQ ETF
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovator and IndexIQ is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust 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 IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and IndexIQ ETF go up and down completely randomly.
Pair Corralation between Innovator ETFs and IndexIQ ETF
Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.57 times more return on investment than IndexIQ ETF. However, Innovator ETFs Trust is 1.76 times less risky than IndexIQ ETF. It trades about 0.06 of its potential returns per unit of risk. IndexIQ ETF Trust is currently generating about 0.01 per unit of risk. If you would invest 2,905 in Innovator ETFs Trust on November 27, 2024 and sell it today you would earn a total of 78.00 from holding Innovator ETFs Trust or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. IndexIQ ETF Trust
Performance |
| Timeline |
| Innovator ETFs Trust |
| IndexIQ ETF Trust |
Innovator ETFs and IndexIQ ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and IndexIQ ETF
The main advantage of trading using opposite Innovator ETFs and IndexIQ ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, IndexIQ ETF 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 IndexIQ ETF will offset losses from the drop in IndexIQ ETF's long position.| Innovator ETFs vs. Innovator Equity Accelerated | Innovator ETFs vs. Innovator Equity Accelerated | Innovator ETFs vs. Innovator Growth 100 Accelerated | Innovator ETFs vs. Innovator ETFs Trust |
| IndexIQ ETF vs. IndexIQ ETF Trust | IndexIQ ETF vs. ProShares SP Kensho | IndexIQ ETF vs. Invesco Alerian Galaxy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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