Correlation Between GM and Innovator ETFs

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

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

Diversification Opportunities for GM and Innovator ETFs

-0.71

Correlation Coefficient

GM  Innovator ETFs

Pay attention - limited upside

The 3 months correlation between GM and Innovator is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Innovator ETFs go up and down completely randomly.

Pair Corralation between GM and Innovator ETFs

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Innovator ETFs. In addition to that, GM is 21.28 times more volatile than Innovator ETFs Trust. It trades about -0.07 of its total potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.17 per unit of volatility. If you would invest  2,454  in Innovator ETFs Trust on November 19, 2024 and sell it today you would earn a total of  28.00  from holding Innovator ETFs Trust or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

General Motors  vs.  Innovator ETFs Trust

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Innovator ETFs Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Innovator ETFs is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with GM and Innovator ETFs

The main advantage of trading using opposite GM and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.