Correlation Between AIM ETF and Innovator ETFs

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

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

Diversification Opportunities for AIM ETF and Innovator ETFs

0.93

Correlation Coefficient

AIM ETF  Innovator ETFs

Almost no diversification

The 3 months correlation between AIM and Innovator is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products 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 AIM ETF 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 AIM ETF Products 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 AIM ETF i.e., AIM ETF and Innovator ETFs go up and down completely randomly.

Pair Corralation between AIM ETF and Innovator ETFs

Given the investment horizon of 90 days AIM ETF Products is expected to under-perform the Innovator ETFs. But the etf apears to be less risky and, when comparing its historical volatility, AIM ETF Products is 1.42 times less risky than Innovator ETFs. The etf trades about -0.08 of its potential returns per unit of risk. The Innovator ETFs Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,958  in Innovator ETFs Trust on October 6, 2024 and sell it today you would lose (4.00) from holding Innovator ETFs Trust or give up 0.14% of portfolio value over 90 days.

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

AIM ETF Products  vs.  Innovator ETFs Trust

AIM ETF Products

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, AIM ETF is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Innovator ETFs Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather 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 AIM ETF and Innovator ETFs

The main advantage of trading using opposite AIM ETF and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF 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 AIM ETF Products 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.