Correlation Between Innovator ETFs and Innovator

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

By analyzing existing cross correlation between Innovator ETFs Trust and Innovator 20 Year, you can compare the effects of market volatilities on Innovator ETFs and Innovator 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 ETFs with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator.

Diversification Opportunities for Innovator ETFs and Innovator

-0.84

Correlation Coefficient

Innovator ETFs  Innovator

Pay attention - limited upside

The 3 months correlation between Innovator and Innovator is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator 20 Year and Innovator ETFs 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 ETFs Trust are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator 20 Year has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator

Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.02 times less return on investment than Innovator. But when comparing it to its historical volatility, Innovator ETFs Trust is 7.12 times less risky than Innovator. It trades about 0.58 of its potential returns per unit of risk. Innovator 20 Year is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,021  in Innovator 20 Year on September 4, 2024 and sell it today you would earn a total of  24.00  from holding Innovator 20 Year or generate 1.19% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Innovator 20 Year

Innovator ETFs Trust

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Innovator 20 Year

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator 20 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Innovator ETFs and Innovator

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

The idea behind Innovator ETFs Trust and Innovator 20 Year 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.