Correlation Between Innovator Long and AIM ETF

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

By analyzing existing cross correlation between Innovator Long Term and AIM ETF Products, you can compare the effects of market volatilities on Innovator Long and AIM ETF 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 Long with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Long and AIM ETF.

Diversification Opportunities for Innovator Long and AIM ETF

-0.63

Correlation Coefficient

Innovator Long  AIM ETF

Excellent diversification

The 3 months correlation between Innovator and AIM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Long Term and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products and Innovator Long 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 Long Term are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Innovator Long i.e., Innovator Long and AIM ETF go up and down completely randomly.

Pair Corralation between Innovator Long and AIM ETF

Given the investment horizon of 90 days Innovator Long Term is expected to under-perform the AIM ETF. But the etf apears to be less risky and, when comparing its historical volatility, Innovator Long Term is 1.59 times less risky than AIM ETF. The etf trades about -0.4 of its potential returns per unit of risk. The AIM ETF Products is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  3,587  in AIM ETF Products on October 5, 2024 and sell it today you would lose (36.00) from holding AIM ETF Products or give up 1.0% of portfolio value over 90 days.

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

Innovator Long Term  vs.  AIM ETF Products

Innovator Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator Long Term has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator Long is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

AIM ETF Products

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, AIM ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Innovator Long and AIM ETF

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

The idea behind Innovator Long Term and AIM ETF Products 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.