Correlation Between Strategy Shares and Innovator ETFs

Can any of the company-specific risk be diversified away by investing in both Strategy 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 Strategy 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 Strategy Shares and Innovator ETFs Trust, you can compare the effects of market volatilities on Strategy 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 Strategy Shares with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategy Shares and Innovator ETFs.

Diversification Opportunities for Strategy Shares and Innovator ETFs

0.72

Correlation Coefficient

Strategy Shares  Innovator ETFs

Poor diversification

The 3 months correlation between Strategy and Innovator is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares 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 Strategy 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 Strategy Shares 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 Strategy Shares i.e., Strategy Shares and Innovator ETFs go up and down completely randomly.

Pair Corralation between Strategy Shares and Innovator ETFs

If you would invest  2,306  in Strategy Shares on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Strategy Shares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Strategy Shares  vs.  Innovator ETFs Trust

Strategy Shares

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Strategy Shares and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy 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 Strategy Shares 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.