Correlation Between Innovator IBD and Streamline Health

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

By analyzing existing cross correlation between Innovator IBD 50 and Streamline Health Solutions, you can compare the effects of market volatilities on Innovator IBD and Streamline Health 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 IBD with a short position of Streamline Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator IBD and Streamline Health.

Diversification Opportunities for Innovator IBD and Streamline Health

0.57

Correlation Coefficient

Innovator IBD  Streamline Health

Very weak diversification

The 3 months correlation between Innovator and Streamline is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Innovator IBD 50 and Streamline Health Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamline Health and Innovator IBD 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 IBD 50 are associated (or correlated) with Streamline Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamline Health has no effect on the direction of Innovator IBD i.e., Innovator IBD and Streamline Health go up and down completely randomly.

Pair Corralation between Innovator IBD and Streamline Health

Given the investment horizon of 90 days Innovator IBD is expected to generate 7.91 times less return on investment than Streamline Health. But when comparing it to its historical volatility, Innovator IBD 50 is 4.56 times less risky than Streamline Health. It trades about 0.09 of its potential returns per unit of risk. Streamline Health Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Streamline Health Solutions on October 8, 2024 and sell it today you would earn a total of  209.00  from holding Streamline Health Solutions or generate 95.0% return on investment over 90 days.

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

Innovator IBD 50  vs.  Streamline Health Solutions

Innovator IBD 50

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator IBD 50 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innovator IBD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Streamline Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Streamline Health Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Streamline Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovator IBD and Streamline Health

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

The idea behind Innovator IBD 50 and Streamline Health Solutions 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.