Correlation Between Global X and Innovator

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

By analyzing existing cross correlation between Global X SuperIncome and Innovator SP Investment, you can compare the effects of market volatilities on Global X and Innovator 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 Global X with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Innovator.

Diversification Opportunities for Global X and Innovator

0.87

Correlation Coefficient

Global X  Innovator

Very poor diversification

The 3 months correlation between Global and Innovator is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperIncome and Innovator SP Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP Investment and Global X 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 Global X SuperIncome are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP Investment has no effect on the direction of Global X i.e., Global X and Innovator go up and down completely randomly.

Pair Corralation between Global X and Innovator

Given the investment horizon of 90 days Global X SuperIncome is expected to under-perform the Innovator. But the etf apears to be less risky and, when comparing its historical volatility, Global X SuperIncome is 1.14 times less risky than Innovator. The etf trades about -0.05 of its potential returns per unit of risk. The Innovator SP Investment is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Innovator SP Investment on December 30, 2024 and sell it today you would lose (21.00) from holding Innovator SP Investment or give up 1.17% of portfolio value over 90 days.

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

Global X SuperIncome  vs.  Innovator SP Investment

Global X SuperIncome

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X SuperIncome has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Innovator SP Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator SP Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and Innovator

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

The idea behind Global X SuperIncome and Innovator SP Investment 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.