Correlation Between Innovator ETFs and VanEck Oil

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

Diversification Opportunities for Innovator ETFs and VanEck Oil

0.24

Correlation Coefficient

Innovator ETFs  VanEck Oil

Modest diversification

The 3 months correlation between Innovator and VanEck is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and VanEck Oil Refiners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Refiners 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Refiners has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and VanEck Oil go up and down completely randomly.

Pair Corralation between Innovator ETFs and VanEck Oil

Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the VanEck Oil. In addition to that, Innovator ETFs is 1.18 times more volatile than VanEck Oil Refiners. It trades about -0.08 of its total potential returns per unit of risk. VanEck Oil Refiners is currently generating about 0.09 per unit of volatility. If you would invest  2,746  in VanEck Oil Refiners on December 29, 2024 and sell it today you would earn a total of  149.00  from holding VanEck Oil Refiners or generate 5.43% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  VanEck Oil Refiners

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. In spite of rather sound basic indicators, Innovator ETFs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

VanEck Oil Refiners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Refiners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, VanEck Oil is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Innovator ETFs and VanEck Oil

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

The idea behind Innovator ETFs Trust and VanEck Oil Refiners 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.