Correlation Between WisdomTree CBOE and Innovator Growth

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

By analyzing existing cross correlation between WisdomTree CBOE SP and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on WisdomTree CBOE and Innovator Growth 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 WisdomTree CBOE with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree CBOE and Innovator Growth.

Diversification Opportunities for WisdomTree CBOE and Innovator Growth

0.94

Correlation Coefficient

WisdomTree CBOE  Innovator Growth

Almost no diversification

The 3 months correlation between WisdomTree and Innovator is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree CBOE SP and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and WisdomTree CBOE 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 WisdomTree CBOE SP are associated (or correlated) with Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of WisdomTree CBOE i.e., WisdomTree CBOE and Innovator Growth go up and down completely randomly.

Pair Corralation between WisdomTree CBOE and Innovator Growth

Given the investment horizon of 90 days WisdomTree CBOE SP is expected to generate 0.68 times more return on investment than Innovator Growth. However, WisdomTree CBOE SP is 1.47 times less risky than Innovator Growth. It trades about -0.07 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about -0.07 per unit of risk. If you would invest  3,285  in WisdomTree CBOE SP on December 23, 2024 and sell it today you would lose (124.00) from holding WisdomTree CBOE SP or give up 3.77% of portfolio value over 90 days.

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

WisdomTree CBOE SP  vs.  Innovator Growth 100 Accelerat

WisdomTree CBOE SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree CBOE SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WisdomTree CBOE is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Innovator Growth 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Growth 100 Accelerated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Innovator Growth is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WisdomTree CBOE and Innovator Growth

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

The idea behind WisdomTree CBOE SP and Innovator Growth 100 Accelerated 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.