Correlation Between Innovator ETFs and 00108WAH3

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and 00108WAH3 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 00108WAH3 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 AEP TEX INC, you can compare the effects of market volatilities on Innovator ETFs and 00108WAH3 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 00108WAH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and 00108WAH3.

Diversification Opportunities for Innovator ETFs and 00108WAH3

-0.53

Correlation Coefficient

Innovator ETFs  00108WAH3

Excellent diversification

The 3 months correlation between Innovator and 00108WAH3 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and 00108WAH3 go up and down completely randomly.

Pair Corralation between Innovator ETFs and 00108WAH3

Given the investment horizon of 90 days Innovator ETFs is expected to generate 25.14 times less return on investment than 00108WAH3. But when comparing it to its historical volatility, Innovator ETFs Trust is 89.63 times less risky than 00108WAH3. It trades about 0.16 of its potential returns per unit of risk. AEP TEX INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,669  in AEP TEX INC on October 10, 2024 and sell it today you would lose (21.00) from holding AEP TEX INC or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.46%
Values	Daily Returns

Innovator ETFs Trust  vs.  AEP TEX INC

Innovator ETFs Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AEP TEX INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AEP TEX INC investors.

Pair Trading with Innovator ETFs and 00108WAH3

The main advantage of trading using opposite Innovator ETFs and 00108WAH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, 00108WAH3 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 00108WAH3 will offset losses from the drop in 00108WAH3's long position.

The idea behind Innovator ETFs Trust and AEP TEX INC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.