Correlation Between Visa and Innovator ETFs

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

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

Diversification Opportunities for Visa and Innovator ETFs

0.74

Correlation Coefficient

Visa  Innovator ETFs

Poor diversification

The 3 months correlation between Visa and Innovator is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Innovator ETFs go up and down completely randomly.

Pair Corralation between Visa and Innovator ETFs

Taking into account the 90-day investment horizon Visa Class A is expected to generate 5.85 times more return on investment than Innovator ETFs. However, Visa is 5.85 times more volatile than Innovator ETFs Trust. It trades about 0.17 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.06 per unit of risk. If you would invest  31,478  in Visa Class A on December 28, 2024 and sell it today you would earn a total of  3,508  from holding Visa Class A or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Innovator ETFs Trust

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Innovator ETFs Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Innovator ETFs is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Visa and Innovator ETFs

The main advantage of trading using opposite Visa and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.