Correlation Between Innovator ETFs and Global X

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Global X 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 Global X 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 Global X SuperDividend, you can compare the effects of market volatilities on Innovator ETFs and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Global X.

Diversification Opportunities for Innovator ETFs and Global X

0.76

Correlation Coefficient

Innovator ETFs  Global X

Poor diversification

The 3 months correlation between Innovator and Global is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperDividend has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Global X go up and down completely randomly.

Pair Corralation between Innovator ETFs and Global X

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.45 times more return on investment than Global X. However, Innovator ETFs Trust is 2.22 times less risky than Global X. It trades about 0.25 of its potential returns per unit of risk. Global X SuperDividend is currently generating about 0.03 per unit of risk. If you would invest  2,400  in Innovator ETFs Trust on September 16, 2024 and sell it today you would earn a total of  105.00  from holding Innovator ETFs Trust or generate 4.38% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Global X SuperDividend

Innovator ETFs Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. 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.

Global X SuperDividend

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SuperDividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Global X 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 Global X

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

The idea behind Innovator ETFs Trust and Global X SuperDividend 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.