Correlation Between ETRACS 2xMonthly and INNOVATOR PREMIUM

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly and INNOVATOR PREMIUM 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 ETRACS 2xMonthly and INNOVATOR PREMIUM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and INNOVATOR PREMIUM INCOME, you can compare the effects of market volatilities on ETRACS 2xMonthly and INNOVATOR PREMIUM 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 ETRACS 2xMonthly with a short position of INNOVATOR PREMIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and INNOVATOR PREMIUM.

Diversification Opportunities for ETRACS 2xMonthly and INNOVATOR PREMIUM

-0.88

Correlation Coefficient

ETRACS 2xMonthly  INNOVATOR PREMIUM

Pay attention - limited upside

The 3 months correlation between ETRACS and INNOVATOR is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay and INNOVATOR PREMIUM INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOVATOR PREMIUM INCOME and ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay are associated (or correlated) with INNOVATOR PREMIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOVATOR PREMIUM INCOME has no effect on the direction of ETRACS 2xMonthly i.e., ETRACS 2xMonthly and INNOVATOR PREMIUM go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and INNOVATOR PREMIUM

Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to under-perform the INNOVATOR PREMIUM. In addition to that, ETRACS 2xMonthly is 30.26 times more volatile than INNOVATOR PREMIUM INCOME. It trades about -0.19 of its total potential returns per unit of risk. INNOVATOR PREMIUM INCOME is currently generating about 0.33 per unit of volatility. If you would invest  2,458  in INNOVATOR PREMIUM INCOME on October 10, 2024 and sell it today you would earn a total of  6.00  from holding INNOVATOR PREMIUM INCOME or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

ETRACS 2xMonthly Pay  vs.  INNOVATOR PREMIUM INCOME

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

INNOVATOR PREMIUM INCOME

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in INNOVATOR PREMIUM INCOME are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INNOVATOR PREMIUM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ETRACS 2xMonthly and INNOVATOR PREMIUM

The main advantage of trading using opposite ETRACS 2xMonthly and INNOVATOR PREMIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly position performs unexpectedly, INNOVATOR PREMIUM 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 PREMIUM will offset losses from the drop in INNOVATOR PREMIUM's long position.

The idea behind ETRACS 2xMonthly Pay and INNOVATOR PREMIUM INCOME 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.