Correlation Between Innovator and Trajan Wealth

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

By analyzing existing cross correlation between Innovator SP 500 and Trajan Wealth, you can compare the effects of market volatilities on Innovator and Trajan Wealth 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 with a short position of Trajan Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Trajan Wealth.

Diversification Opportunities for Innovator and Trajan Wealth

0.0

Correlation Coefficient

Innovator  Trajan Wealth

Pay attention - limited upside

The 3 months correlation between Innovator and Trajan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and Trajan Wealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trajan Wealth and Innovator 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 SP 500 are associated (or correlated) with Trajan Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trajan Wealth has no effect on the direction of Innovator i.e., Innovator and Trajan Wealth go up and down completely randomly.

Pair Corralation between Innovator and Trajan Wealth

If you would invest (100.00) in Trajan Wealth on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Trajan Wealth or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Innovator SP 500  vs.  Trajan Wealth

Innovator SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Innovator is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Trajan Wealth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trajan Wealth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Trajan Wealth is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innovator and Trajan Wealth

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

The idea behind Innovator SP 500 and Trajan Wealth 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.