Correlation Between ETFis Series and Innovator

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

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

Diversification Opportunities for ETFis Series and Innovator

0.55

Correlation Coefficient

ETFis Series  Innovator

Very weak diversification

The 3 months correlation between ETFis and Innovator is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ETFis Series Trust 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 ETFis Series 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 ETFis Series Trust 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 ETFis Series i.e., ETFis Series and Innovator go up and down completely randomly.

Pair Corralation between ETFis Series and Innovator

Given the investment horizon of 90 days ETFis Series Trust is expected to generate 0.81 times more return on investment than Innovator. However, ETFis Series Trust is 1.23 times less risky than Innovator. It trades about 0.02 of its potential returns per unit of risk. Innovator SP Investment is currently generating about -0.02 per unit of risk. If you would invest  1,815  in ETFis Series Trust on December 29, 2024 and sell it today you would earn a total of  11.00  from holding ETFis Series Trust or generate 0.61% return on investment over 90 days.

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

ETFis Series Trust  vs.  Innovator SP Investment

ETFis Series Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ETFis Series Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ETFis Series is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail 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 ETFis Series and Innovator

The main advantage of trading using opposite ETFis Series and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFis Series 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 ETFis Series Trust 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.