Correlation Between TappAlpha SPY and Innovator Growth

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

By analyzing existing cross correlation between TappAlpha SPY Growth and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on TappAlpha SPY and Innovator Growth 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 TappAlpha SPY with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of TappAlpha SPY and Innovator Growth.

Diversification Opportunities for TappAlpha SPY and Innovator Growth

0.69

Correlation Coefficient

TappAlpha SPY  Innovator Growth

Poor diversification

The 3 months correlation between TappAlpha and Innovator is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TappAlpha SPY Growth and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and TappAlpha SPY 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 TappAlpha SPY Growth are associated (or correlated) with Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of TappAlpha SPY i.e., TappAlpha SPY and Innovator Growth go up and down completely randomly.

Pair Corralation between TappAlpha SPY and Innovator Growth

Given the investment horizon of 90 days TappAlpha SPY is expected to generate 7.4 times less return on investment than Innovator Growth. In addition to that, TappAlpha SPY is 1.09 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.02 of its total potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.19 per unit of volatility. If you would invest  3,220  in Innovator Growth 100 Accelerated on October 10, 2024 and sell it today you would earn a total of  281.00  from holding Innovator Growth 100 Accelerated or generate 8.73% return on investment over 90 days.

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

TappAlpha SPY Growth  vs.  Innovator Growth 100 Accelerat

TappAlpha SPY Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TappAlpha SPY Growth are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TappAlpha SPY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Innovator Growth 100

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TappAlpha SPY and Innovator Growth

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

The idea behind TappAlpha SPY Growth and Innovator Growth 100 Accelerated 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.