Correlation Between Innovator and IShares Preferred

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

By analyzing existing cross correlation between Innovator SP Investment and iShares Preferred and, you can compare the effects of market volatilities on Innovator and IShares Preferred 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 with a short position of IShares Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and IShares Preferred.

Diversification Opportunities for Innovator and IShares Preferred

0.94

Correlation Coefficient

Innovator  IShares Preferred

Almost no diversification

The 3 months correlation between Innovator and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP Investment and iShares Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Preferred and Innovator 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 SP Investment are associated (or correlated) with IShares Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Preferred has no effect on the direction of Innovator i.e., Innovator and IShares Preferred go up and down completely randomly.

Pair Corralation between Innovator and IShares Preferred

Given the investment horizon of 90 days Innovator SP Investment is expected to under-perform the IShares Preferred. In addition to that, Innovator is 1.31 times more volatile than iShares Preferred and. It trades about -0.06 of its total potential returns per unit of risk. iShares Preferred and is currently generating about -0.03 per unit of volatility. If you would invest  3,238  in iShares Preferred and on October 26, 2024 and sell it today you would lose (39.00) from holding iShares Preferred and or give up 1.2% of portfolio value over 90 days.

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

Innovator SP Investment  vs.  iShares Preferred and

Innovator SP Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator SP Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Preferred and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Innovator and IShares Preferred

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

The idea behind Innovator SP Investment and iShares Preferred and 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.