Correlation Between Invesco Actively and Innovator ETFs

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

By analyzing existing cross correlation between Invesco Actively Managed and Innovator ETFs Trust, you can compare the effects of market volatilities on Invesco Actively 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 Invesco Actively with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Actively and Innovator ETFs.

Diversification Opportunities for Invesco Actively and Innovator ETFs

0.93

Correlation Coefficient

Invesco Actively  Innovator ETFs

Almost no diversification

The 3 months correlation between Invesco and Innovator is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Actively Managed 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 Invesco Actively 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 Invesco Actively Managed 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 Invesco Actively i.e., Invesco Actively and Innovator ETFs go up and down completely randomly.

Pair Corralation between Invesco Actively and Innovator ETFs

Given the investment horizon of 90 days Invesco Actively Managed is expected to under-perform the Innovator ETFs. In addition to that, Invesco Actively is 1.65 times more volatile than Innovator ETFs Trust. It trades about -0.04 of its total potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.06 per unit of volatility. If you would invest  2,696  in Innovator ETFs Trust on October 7, 2024 and sell it today you would earn a total of  173.00  from holding Innovator ETFs Trust or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	48.39%
Values	Daily Returns

Invesco Actively Managed  vs.  Innovator ETFs Trust

Invesco Actively Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Actively Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco Actively is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Invesco Actively and Innovator ETFs

The main advantage of trading using opposite Invesco Actively and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Actively 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.

The idea behind Invesco Actively Managed and Innovator ETFs Trust 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.