Correlation Between AIM ETF and Innovator

Can any of the company-specific risk be diversified away by investing in both AIM ETF and Innovator 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 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 20 Year, you can compare the effects of market volatilities on AIM ETF and Innovator 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and Innovator.

Diversification Opportunities for AIM ETF and Innovator

-0.33

Correlation Coefficient

AIM ETF  Innovator

Very good diversification

The 3 months correlation between AIM and Innovator is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Innovator 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator 20 Year 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator 20 Year has no effect on the direction of AIM ETF i.e., AIM ETF and Innovator go up and down completely randomly.

Pair Corralation between AIM ETF and Innovator

Given the investment horizon of 90 days AIM ETF Products is expected to generate 1.32 times more return on investment than Innovator. However, AIM ETF is 1.32 times more volatile than Innovator 20 Year. It trades about -0.16 of its potential returns per unit of risk. Innovator 20 Year is currently generating about -0.6 per unit of risk. If you would invest  3,320  in AIM ETF Products on October 5, 2024 and sell it today you would lose (54.00) from holding AIM ETF Products or give up 1.63% of portfolio value over 90 days.

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

AIM ETF Products  vs.  Innovator 20 Year

AIM ETF Products

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 9 (%) 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 20 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator 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 AIM ETF and Innovator

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

The idea behind AIM ETF Products and Innovator 20 Year 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.