Correlation Between Innovator ETFs and Capital Group

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

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

Diversification Opportunities for Innovator ETFs and Capital Group

0.58

Correlation Coefficient

Innovator ETFs  Capital Group

Very weak diversification

The 3 months correlation between Innovator and Capital is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Capital Group Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Dividend and Innovator ETFs 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 ETFs Trust are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Dividend has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Capital Group go up and down completely randomly.

Pair Corralation between Innovator ETFs and Capital Group

Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the Capital Group. In addition to that, Innovator ETFs is 1.46 times more volatile than Capital Group Dividend. It trades about -0.06 of its total potential returns per unit of risk. Capital Group Dividend is currently generating about 0.03 per unit of volatility. If you would invest  3,560  in Capital Group Dividend on December 22, 2024 and sell it today you would earn a total of  39.00  from holding Capital Group Dividend or generate 1.1% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Capital Group Dividend

Innovator ETFs Trust

Risk-Adjusted Performance

Very Weak

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

Capital Group Dividend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Dividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Innovator ETFs and Capital Group

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

The idea behind Innovator ETFs Trust and Capital Group Dividend 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.