Correlation Between IShares Blockchain and Innovator

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

By analyzing existing cross correlation between iShares Blockchain and and Innovator SP 500, you can compare the effects of market volatilities on IShares Blockchain and Innovator 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 IShares Blockchain with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Blockchain and Innovator.

Diversification Opportunities for IShares Blockchain and Innovator

0.93

Correlation Coefficient

IShares Blockchain  Innovator

Almost no diversification

The 3 months correlation between IShares and Innovator is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Blockchain and and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 and IShares Blockchain 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 iShares Blockchain and are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of IShares Blockchain i.e., IShares Blockchain and Innovator go up and down completely randomly.

Pair Corralation between IShares Blockchain and Innovator

Given the investment horizon of 90 days iShares Blockchain and is expected to generate 7.47 times more return on investment than Innovator. However, IShares Blockchain is 7.47 times more volatile than Innovator SP 500. It trades about 0.08 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.14 per unit of risk. If you would invest  1,011  in iShares Blockchain and on September 26, 2024 and sell it today you would earn a total of  2,591  from holding iShares Blockchain and or generate 256.28% return on investment over 90 days.

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

iShares Blockchain and  vs.  Innovator SP 500

iShares Blockchain and

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Innovator SP 500

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Innovator is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Blockchain and Innovator

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

The idea behind iShares Blockchain and and Innovator SP 500 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.