Correlation Between Innovator ETFs and Exchange Traded

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Exchange Traded 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 Exchange Traded 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 Exchange Traded Concepts, you can compare the effects of market volatilities on Innovator ETFs and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Exchange Traded.

Diversification Opportunities for Innovator ETFs and Exchange Traded

0.68

Correlation Coefficient

Innovator ETFs  Exchange Traded

Poor diversification

The 3 months correlation between Innovator and Exchange is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Exchange Traded go up and down completely randomly.

Pair Corralation between Innovator ETFs and Exchange Traded

Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the Exchange Traded. But the etf apears to be less risky and, when comparing its historical volatility, Innovator ETFs Trust is 1.7 times less risky than Exchange Traded. The etf trades about -0.06 of its potential returns per unit of risk. The Exchange Traded Concepts is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,041  in Exchange Traded Concepts on December 30, 2024 and sell it today you would lose (54.00) from holding Exchange Traded Concepts or give up 2.65% of portfolio value over 90 days.

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

Innovator ETFs Trust  vs.  Exchange Traded Concepts

Innovator ETFs Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Exchange Traded Concepts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Exchange Traded is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Innovator ETFs and Exchange Traded

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

The idea behind Innovator ETFs Trust and Exchange Traded Concepts 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.