Correlation Between Virtus InfraCap and Innovator

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

By analyzing existing cross correlation between Virtus InfraCap Preferred and Innovator SP Investment, you can compare the effects of market volatilities on Virtus InfraCap 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 Virtus InfraCap with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus InfraCap and Innovator.

Diversification Opportunities for Virtus InfraCap and Innovator

0.88

Correlation Coefficient

Virtus InfraCap  Innovator

Very poor diversification

The 3 months correlation between Virtus and Innovator is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Virtus InfraCap Preferred and Innovator SP Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP Investment and Virtus InfraCap 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 Virtus InfraCap Preferred 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 SP Investment has no effect on the direction of Virtus InfraCap i.e., Virtus InfraCap and Innovator go up and down completely randomly.

Pair Corralation between Virtus InfraCap and Innovator

Given the investment horizon of 90 days Virtus InfraCap Preferred is expected to generate 0.67 times more return on investment than Innovator. However, Virtus InfraCap Preferred is 1.5 times less risky than Innovator. It trades about 0.0 of its potential returns per unit of risk. Innovator SP Investment is currently generating about -0.05 per unit of risk. If you would invest  2,215  in Virtus InfraCap Preferred on December 1, 2024 and sell it today you would lose (3.00) from holding Virtus InfraCap Preferred or give up 0.14% of portfolio value over 90 days.

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

Virtus InfraCap Preferred  vs.  Innovator SP Investment

Virtus InfraCap Preferred

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus InfraCap Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Virtus InfraCap is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Innovator SP Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator SP Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Virtus InfraCap and Innovator

The main advantage of trading using opposite Virtus InfraCap and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus InfraCap 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 Virtus InfraCap Preferred and Innovator SP Investment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.