Correlation Between Innovator ETFs and Innovator Nasdaq

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator Nasdaq 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 Nasdaq 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 Nasdaq 100 Power, you can compare the effects of market volatilities on Innovator ETFs and Innovator Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator Nasdaq.

Diversification Opportunities for Innovator ETFs and Innovator Nasdaq

-0.45

Correlation Coefficient

Innovator ETFs  Innovator Nasdaq

Very good diversification

The 3 months correlation between Innovator and Innovator is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Nasdaq 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Nasdaq 100 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Nasdaq 100 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Nasdaq go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator Nasdaq

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 11.01 times more return on investment than Innovator Nasdaq. However, Innovator ETFs is 11.01 times more volatile than Innovator Nasdaq 100 Power. It trades about 0.13 of its potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.16 per unit of risk. If you would invest  2,947  in Innovator ETFs Trust on October 25, 2024 and sell it today you would earn a total of  1,159  from holding Innovator ETFs Trust or generate 39.33% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Innovator Nasdaq 100 Power

Innovator ETFs Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Innovator ETFs showed solid returns over the last few months and may actually be approaching a breakup point.

Innovator Nasdaq 100

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Nasdaq 100 Power are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Nasdaq is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Innovator ETFs and Innovator Nasdaq

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

The idea behind Innovator ETFs Trust and Innovator Nasdaq 100 Power 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.