Correlation Between Innovator Growth and Volatility Shares

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

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

Diversification Opportunities for Innovator Growth and Volatility Shares

-0.48

Correlation Coefficient

Innovator Growth  Volatility Shares

Very good diversification

The 3 months correlation between Innovator and Volatility is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Growth 100 Accelerat and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares Trust and Innovator Growth 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 Innovator Growth 100 Accelerated are associated (or correlated) with Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of Innovator Growth i.e., Innovator Growth and Volatility Shares go up and down completely randomly.

Pair Corralation between Innovator Growth and Volatility Shares

Given the investment horizon of 90 days Innovator Growth 100 Accelerated is expected to generate 0.03 times more return on investment than Volatility Shares. However, Innovator Growth 100 Accelerated is 29.18 times less risky than Volatility Shares. It trades about 0.16 of its potential returns per unit of risk. Volatility Shares Trust is currently generating about -0.18 per unit of risk. If you would invest  3,819  in Innovator Growth 100 Accelerated on November 19, 2024 and sell it today you would earn a total of  40.80  from holding Innovator Growth 100 Accelerated or generate 1.07% return on investment over 90 days.

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

Innovator Growth 100 Accelerat  vs.  Volatility Shares Trust

Innovator Growth 100

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. 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.

Volatility Shares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volatility Shares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Innovator Growth and Volatility Shares

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

The idea behind Innovator Growth 100 Accelerated and Volatility Shares 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.