Correlation Between TSJA and Innovator ETFs

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

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

Diversification Opportunities for TSJA and Innovator ETFs

-0.81

Correlation Coefficient

TSJA  Innovator ETFs

Pay attention - limited upside

The 3 months correlation between TSJA and Innovator is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding TSJA 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 TSJA 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 TSJA 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 TSJA i.e., TSJA and Innovator ETFs go up and down completely randomly.

Pair Corralation between TSJA and Innovator ETFs

Given the investment horizon of 90 days TSJA is expected to generate 1.16 times more return on investment than Innovator ETFs. However, TSJA is 1.16 times more volatile than Innovator ETFs Trust. It trades about 0.14 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.02 per unit of risk. If you would invest  2,413  in TSJA on September 5, 2024 and sell it today you would earn a total of  360.00  from holding TSJA or generate 14.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	78.65%
Values	Daily Returns

TSJA  vs.  Innovator ETFs Trust

TSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, TSJA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TSJA and Innovator ETFs

The main advantage of trading using opposite TSJA and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSJA 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 TSJA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.