Correlation Between SWP Growth and Innovator ETFs

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

By analyzing existing cross correlation between SWP Growth Income and Innovator ETFs Trust, you can compare the effects of market volatilities on SWP Growth and Innovator ETFs 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 SWP Growth with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and Innovator ETFs.

Diversification Opportunities for SWP Growth and Innovator ETFs

0.7

Correlation Coefficient

SWP Growth  Innovator ETFs

Poor diversification

The 3 months correlation between SWP and Innovator is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and SWP Growth 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 SWP Growth Income are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of SWP Growth i.e., SWP Growth and Innovator ETFs go up and down completely randomly.

Pair Corralation between SWP Growth and Innovator ETFs

Considering the 90-day investment horizon SWP Growth Income is expected to under-perform the Innovator ETFs. In addition to that, SWP Growth is 1.44 times more volatile than Innovator ETFs Trust. It trades about -0.01 of its total potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.07 per unit of volatility. If you would invest  2,574  in Innovator ETFs Trust on December 2, 2024 and sell it today you would earn a total of  58.00  from holding Innovator ETFs Trust or generate 2.25% return on investment over 90 days.

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

SWP Growth Income  vs.  Innovator ETFs Trust

SWP Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWP Growth Income has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Innovator ETFs Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator ETFs is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SWP Growth and Innovator ETFs

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

The idea behind SWP Growth Income and Innovator ETFs Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.