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

-0.08

Correlation Coefficient

Innovator ETFs  Innovator Nasdaq

Good diversification

The 3 months correlation between Innovator and Innovator is -0.08. 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 under-perform the Innovator Nasdaq. In addition to that, Innovator ETFs is 1.11 times more volatile than Innovator Nasdaq 100 Power. It trades about -0.03 of its total potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.32 per unit of volatility. If you would invest  6,076  in Innovator Nasdaq 100 Power on September 4, 2024 and sell it today you would earn a total of  202.00  from holding Innovator Nasdaq 100 Power or generate 3.32% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Innovator Nasdaq 100 Power

Innovator ETFs Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Innovator Nasdaq 100

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Nasdaq 100 Power are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Innovator Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Stocks Directory module to find actively traded stocks across global markets.