Correlation Between Innovator Capital and IShares Aerospace

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

By analyzing existing cross correlation between Innovator Capital Management and iShares Aerospace Defense, you can compare the effects of market volatilities on Innovator Capital and IShares Aerospace 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 Capital with a short position of IShares Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Capital and IShares Aerospace.

Diversification Opportunities for Innovator Capital and IShares Aerospace

0.0

Correlation Coefficient

Innovator Capital  IShares Aerospace

Pay attention - limited upside

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

Pair Corralation between Innovator Capital and IShares Aerospace

If you would invest  14,547  in iShares Aerospace Defense on December 30, 2024 and sell it today you would earn a total of  776.00  from holding iShares Aerospace Defense or generate 5.33% return on investment over 90 days.

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

Innovator Capital Management  vs.  iShares Aerospace Defense

Innovator Capital

Risk-Adjusted Performance

Very Weak

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

iShares Aerospace Defense

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Aerospace Defense are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Aerospace is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innovator Capital and IShares Aerospace

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

The idea behind Innovator Capital Management and iShares Aerospace Defense 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.