Correlation Between Mairs Power and Innovator Nasdaq

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

By analyzing existing cross correlation between Mairs Power Minnesota and Innovator Nasdaq 100 Power, you can compare the effects of market volatilities on Mairs Power 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 Mairs Power with a short position of Innovator Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Innovator Nasdaq.

Diversification Opportunities for Mairs Power and Innovator Nasdaq

0.01

Correlation Coefficient

Mairs Power  Innovator Nasdaq

Significant diversification

The 3 months correlation between Mairs and Innovator is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Minnesota 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 Mairs Power 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 Mairs Power Minnesota 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 Mairs Power i.e., Mairs Power and Innovator Nasdaq go up and down completely randomly.

Pair Corralation between Mairs Power and Innovator Nasdaq

Given the investment horizon of 90 days Mairs Power Minnesota is expected to under-perform the Innovator Nasdaq. But the etf apears to be less risky and, when comparing its historical volatility, Mairs Power Minnesota is 2.09 times less risky than Innovator Nasdaq. The etf trades about -0.45 of its potential returns per unit of risk. The Innovator Nasdaq 100 Power is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,346  in Innovator Nasdaq 100 Power on October 7, 2024 and sell it today you would lose (19.00) from holding Innovator Nasdaq 100 Power or give up 0.3% of portfolio value over 90 days.

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

Mairs Power Minnesota  vs.  Innovator Nasdaq 100 Power

Mairs Power Minnesota

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mairs Power Minnesota has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Mairs Power is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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. Despite quite persistent basic indicators, Innovator Nasdaq is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mairs Power and Innovator Nasdaq

The main advantage of trading using opposite Mairs Power and Innovator Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power 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 Mairs Power Minnesota 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.