Correlation Between Good Life and Innovator Premium

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

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

Diversification Opportunities for Good Life and Innovator Premium

0.0

Correlation Coefficient

Good Life  Innovator Premium

Pay attention - limited upside

The 3 months correlation between Good and Innovator is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Good Life China and Innovator Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Premium Income and Good Life 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 Good Life China are associated (or correlated) with Innovator Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Premium Income has no effect on the direction of Good Life i.e., Good Life and Innovator Premium go up and down completely randomly.

Pair Corralation between Good Life and Innovator Premium

If you would invest  2,438  in Innovator Premium Income on October 22, 2024 and sell it today you would earn a total of  36.00  from holding Innovator Premium Income or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Good Life China  vs.  Innovator Premium Income

Good Life China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Life China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Good Life is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Innovator Premium Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Premium Income are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Innovator Premium is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Good Life and Innovator Premium

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

The idea behind Good Life China and Innovator Premium 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.