Correlation Between Innovator Growth and Innovator Equity

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

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

Diversification Opportunities for Innovator Growth and Innovator Equity

0.98

Correlation Coefficient

Innovator Growth  Innovator Equity

Almost no diversification

The 3 months correlation between Innovator and Innovator is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Growth 100 Accelerat and Innovator Equity Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Acc and Innovator Growth 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 Growth 100 Accelerated are associated (or correlated) with Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Acc has no effect on the direction of Innovator Growth i.e., Innovator Growth and Innovator Equity go up and down completely randomly.

Pair Corralation between Innovator Growth and Innovator Equity

Given the investment horizon of 90 days Innovator Growth 100 Accelerated is expected to generate 3.09 times more return on investment than Innovator Equity. However, Innovator Growth is 3.09 times more volatile than Innovator Equity Accelerated. It trades about 0.23 of its potential returns per unit of risk. Innovator Equity Accelerated is currently generating about 0.23 per unit of risk. If you would invest  3,061  in Innovator Growth 100 Accelerated on September 12, 2024 and sell it today you would earn a total of  392.00  from holding Innovator Growth 100 Accelerated or generate 12.81% return on investment over 90 days.

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

Innovator Growth 100 Accelerat  vs.  Innovator Equity Accelerated

Innovator Growth 100

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 17 (%) 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 January 2025.

Innovator Equity Acc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Equity Accelerated are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking indicators, Innovator Equity 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 Growth and Innovator Equity

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

The idea behind Innovator Growth 100 Accelerated and Innovator Equity 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.