Correlation Between Innovator Equity and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Innovator Equity 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 Innovator Equity and Innovator ETFs 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 Innovator ETFs Trust, you can compare the effects of market volatilities on Innovator Equity 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 Innovator Equity with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and Innovator ETFs.
Diversification Opportunities for Innovator Equity and Innovator ETFs
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Innovator and Innovator is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Defined 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 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 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 Innovator Equity i.e., Innovator Equity and Innovator ETFs go up and down completely randomly.
Pair Corralation between Innovator Equity and Innovator ETFs
Given the investment horizon of 90 days Innovator Equity Defined is expected to generate 0.31 times more return on investment than Innovator ETFs. However, Innovator Equity Defined is 3.24 times less risky than Innovator ETFs. It trades about 0.25 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.03 per unit of risk. If you would invest 2,486 in Innovator Equity Defined on September 4, 2024 and sell it today you would earn a total of 22.00 from holding Innovator Equity Defined or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Equity Defined vs. Innovator ETFs Trust
Performance |
| Timeline |
| Innovator Equity Defined |
| Innovator ETFs Trust |
Innovator Equity and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Equity and Innovator ETFs
The main advantage of trading using opposite Innovator Equity and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity 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.| Innovator Equity vs. FT Vest Equity | Innovator Equity vs. Northern Lights | Innovator Equity vs. Dimensional International High | Innovator Equity vs. JPMorgan Fundamental Data |
| Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. FT Cboe Vest |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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