Correlation Between Innovator Equity and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Innovator Equity and Dow Jones 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 Equity and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Equity Defined and Dow Jones Industrial, you can compare the effects of market volatilities on Innovator Equity and Dow Jones 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 Equity with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and Dow Jones.
Diversification Opportunities for Innovator Equity and Dow Jones
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innovator and Dow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Defined and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Innovator Equity 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 Equity Defined are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Innovator Equity i.e., Innovator Equity and Dow Jones go up and down completely randomly.
Pair Corralation between Innovator Equity and Dow Jones
Given the investment horizon of 90 days Innovator Equity is expected to generate 3.14 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Innovator Equity Defined is 3.14 times less risky than Dow Jones. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 85.71% |
| Values | Daily Returns |
Innovator Equity Defined vs. Dow Jones Industrial
Performance |
| Timeline |
Innovator Equity and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Innovator Equity Defined
Pair trading matchups for Innovator Equity
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Innovator Equity and Dow Jones
The main advantage of trading using opposite Innovator Equity and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Innovator Equity vs. FT Vest Equity | Innovator Equity vs. Northern Lights | Innovator Equity vs. Dimensional International High | Innovator Equity vs. Matthews China Discovery |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |