Correlation Between Innovator ETFs and Innovator Equity

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator Equity 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 Equity 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 Equity Buffer, you can compare the effects of market volatilities on Innovator ETFs and Innovator Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator Equity.

Diversification Opportunities for Innovator ETFs and Innovator Equity

-0.47

Correlation Coefficient

Innovator ETFs  Innovator Equity

Very good diversification

The 3 months correlation between Innovator and Innovator is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Equity Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Buffer 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Buffer has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Equity go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator Equity

Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the Innovator Equity. But the etf apears to be less risky and, when comparing its historical volatility, Innovator ETFs Trust is 1.09 times less risky than Innovator Equity. The etf trades about -0.15 of its potential returns per unit of risk. The Innovator Equity Buffer is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,406  in Innovator Equity Buffer on September 26, 2024 and sell it today you would earn a total of  125.00  from holding Innovator Equity Buffer or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Innovator ETFs Trust  vs.  Innovator Equity Buffer

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 Equity Buffer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Equity Buffer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Innovator Equity is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Innovator ETFs and Innovator Equity

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

The idea behind Innovator ETFs Trust and Innovator Equity Buffer 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.