Correlation Between FT Vest and Innovator Growth

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Can any of the company-specific risk be diversified away by investing in both FT Vest and Innovator Growth 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 FT Vest and Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Dow and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on FT Vest and Innovator Growth 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 FT Vest with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Innovator Growth.

Diversification Opportunities for FT Vest and Innovator Growth

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between FDND and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Dow and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and FT Vest 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 FT Vest Dow are associated (or correlated) with Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of FT Vest i.e., FT Vest and Innovator Growth go up and down completely randomly.

Pair Corralation between FT Vest and Innovator Growth

Given the investment horizon of 90 days FT Vest Dow is expected to under-perform the Innovator Growth. In addition to that, FT Vest is 1.77 times more volatile than Innovator Growth 100 Accelerated. It trades about -0.15 of its total potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.11 per unit of volatility. If you would invest  3,453  in Innovator Growth 100 Accelerated on October 12, 2024 and sell it today you would earn a total of  48.00  from holding Innovator Growth 100 Accelerated or generate 1.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

FT Vest Dow  vs.  Innovator Growth 100 Accelerat

 Performance 
       Timeline  
FT Vest Dow 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Dow are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.
Innovator Growth 100 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FT Vest and Innovator Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FT Vest and Innovator Growth

The main advantage of trading using opposite FT Vest and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, Innovator Growth 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 Growth will offset losses from the drop in Innovator Growth's long position.
The idea behind FT Vest Dow and Innovator Growth 100 Accelerated 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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