Correlation Between Innovator Loup and Invesco Agriculture

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

By analyzing existing cross correlation between Innovator Loup Frontier and Invesco Agriculture Commodity, you can compare the effects of market volatilities on Innovator Loup and Invesco Agriculture 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 Loup with a short position of Invesco Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Loup and Invesco Agriculture.

Diversification Opportunities for Innovator Loup and Invesco Agriculture

0.64

Correlation Coefficient

Innovator Loup  Invesco Agriculture

Poor diversification

The 3 months correlation between Innovator and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Loup Frontier and Invesco Agriculture Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Agriculture and Innovator Loup 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 Loup Frontier are associated (or correlated) with Invesco Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Agriculture has no effect on the direction of Innovator Loup i.e., Innovator Loup and Invesco Agriculture go up and down completely randomly.

Pair Corralation between Innovator Loup and Invesco Agriculture

Given the investment horizon of 90 days Innovator Loup Frontier is expected to generate 2.11 times more return on investment than Invesco Agriculture. However, Innovator Loup is 2.11 times more volatile than Invesco Agriculture Commodity. It trades about 0.15 of its potential returns per unit of risk. Invesco Agriculture Commodity is currently generating about 0.12 per unit of risk. If you would invest  4,690  in Innovator Loup Frontier on September 22, 2024 and sell it today you would earn a total of  810.00  from holding Innovator Loup Frontier or generate 17.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Innovator Loup Frontier  vs.  Invesco Agriculture Commodity

Innovator Loup Frontier

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Loup Frontier are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Loup reported solid returns over the last few months and may actually be approaching a breakup point.

Invesco Agriculture

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Agriculture Commodity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Invesco Agriculture is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innovator Loup and Invesco Agriculture

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

The idea behind Innovator Loup Frontier and Invesco Agriculture Commodity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.