Correlation Between Impact Shares and Innovator ETFs

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

By analyzing existing cross correlation between Impact Shares NAACP and Innovator ETFs Trust, you can compare the effects of market volatilities on Impact Shares and Innovator ETFs 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 Impact Shares with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Shares and Innovator ETFs.

Diversification Opportunities for Impact Shares and Innovator ETFs

0.72

Correlation Coefficient

Impact Shares  Innovator ETFs

Poor diversification

The 3 months correlation between Impact and Innovator is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Impact Shares NAACP and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Impact Shares 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 Impact Shares NAACP are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Impact Shares i.e., Impact Shares and Innovator ETFs go up and down completely randomly.

Pair Corralation between Impact Shares and Innovator ETFs

Given the investment horizon of 90 days Impact Shares NAACP is expected to generate 0.84 times more return on investment than Innovator ETFs. However, Impact Shares NAACP is 1.2 times less risky than Innovator ETFs. It trades about -0.24 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.21 per unit of risk. If you would invest  4,346  in Impact Shares NAACP on October 12, 2024 and sell it today you would lose (203.00) from holding Impact Shares NAACP or give up 4.67% of portfolio value over 90 days.

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

Impact Shares NAACP  vs.  Innovator ETFs Trust

Impact Shares NAACP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Shares NAACP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Impact Shares is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Innovator ETFs Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Innovator ETFs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Impact Shares and Innovator ETFs

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

The idea behind Impact Shares NAACP and Innovator ETFs Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.