Correlation Between Innovator ETFs and Innovator Premium

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

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

Diversification Opportunities for Innovator ETFs and Innovator Premium

-0.61

Correlation Coefficient

Innovator ETFs  Innovator Premium

Excellent diversification

The 3 months correlation between Innovator and Innovator is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust 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 Innovator ETFs 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 ETFs Trust 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 Innovator ETFs i.e., Innovator ETFs and Innovator Premium go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator Premium

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 2.53 times more return on investment than Innovator Premium. However, Innovator ETFs is 2.53 times more volatile than Innovator Premium Income. It trades about 0.11 of its potential returns per unit of risk. Innovator Premium Income is currently generating about 0.13 per unit of risk. If you would invest  2,510  in Innovator ETFs Trust on October 4, 2024 and sell it today you would earn a total of  352.00  from holding Innovator ETFs Trust or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.74%
Values	Daily Returns

Innovator ETFs Trust  vs.  Innovator Premium Income

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Innovator Premium Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator Premium Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Innovator Premium is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Innovator ETFs and Innovator Premium

The main advantage of trading using opposite Innovator ETFs and Innovator Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs 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 Innovator ETFs Trust 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.