Correlation Between Innovator ETFs and 0010EPAF5

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and 0010EPAF5 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 0010EPAF5 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 CENT, you can compare the effects of market volatilities on Innovator ETFs and 0010EPAF5 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 0010EPAF5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and 0010EPAF5.

Diversification Opportunities for Innovator ETFs and 0010EPAF5

-0.58

Correlation Coefficient

Innovator ETFs  0010EPAF5

Excellent diversification

The 3 months correlation between Innovator and 0010EPAF5 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and AEP TEX CENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX CENT 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 0010EPAF5. 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 CENT has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and 0010EPAF5 go up and down completely randomly.

Pair Corralation between Innovator ETFs and 0010EPAF5

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.82 times more return on investment than 0010EPAF5. However, Innovator ETFs Trust is 1.22 times less risky than 0010EPAF5. It trades about 0.08 of its potential returns per unit of risk. AEP TEX CENT is currently generating about 0.04 per unit of risk. If you would invest  2,987  in Innovator ETFs Trust on October 26, 2024 and sell it today you would earn a total of  31.00  from holding Innovator ETFs Trust or generate 1.04% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  AEP TEX CENT

Innovator ETFs Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovator ETFs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AEP TEX CENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP TEX CENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, 0010EPAF5 is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Innovator ETFs and 0010EPAF5

The main advantage of trading using opposite Innovator ETFs and 0010EPAF5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, 0010EPAF5 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 0010EPAF5 will offset losses from the drop in 0010EPAF5's long position.

The idea behind Innovator ETFs Trust and AEP TEX CENT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.