Correlation Between Innovator Premium and Saba Capital

Can any of the company-specific risk be diversified away by investing in both Innovator Premium and Saba 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 Innovator Premium and Saba Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovator Premium Income and Saba Capital Income, you can compare the effects of market volatilities on Innovator Premium and Saba 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 Innovator Premium with a short position of Saba Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Premium and Saba Capital.

Diversification Opportunities for Innovator Premium and Saba Capital

0.88

Correlation Coefficient

Innovator Premium  Saba Capital

Very poor diversification

The 3 months correlation between Innovator and Saba is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Premium Income and Saba Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saba Capital Income and Innovator Premium 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 Premium Income are associated (or correlated) with Saba Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saba Capital Income has no effect on the direction of Innovator Premium i.e., Innovator Premium and Saba Capital go up and down completely randomly.

Pair Corralation between Innovator Premium and Saba Capital

Given the investment horizon of 90 days Innovator Premium is expected to generate 10.49 times less return on investment than Saba Capital. But when comparing it to its historical volatility, Innovator Premium Income is 7.95 times less risky than Saba Capital. It trades about 0.1 of its potential returns per unit of risk. Saba Capital Income is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  864.00  in Saba Capital Income on September 22, 2024 and sell it today you would earn a total of  25.00  from holding Saba Capital Income or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Innovator Premium Income  vs.  Saba Capital Income

Innovator Premium Income

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Premium Income are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Innovator Premium is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Saba Capital Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saba Capital Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Saba Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator Premium and Saba Capital

The main advantage of trading using opposite Innovator Premium and Saba Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Premium position performs unexpectedly, Saba 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 Saba Capital will offset losses from the drop in Saba Capital's long position.

The idea behind Innovator Premium Income and Saba Capital Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.