Correlation Between Innovator ETFs and Invesco Global

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

Diversification Opportunities for Innovator ETFs and Invesco Global

0.26

Correlation Coefficient

Innovator ETFs  Invesco Global

Modest diversification

The 3 months correlation between Innovator and Invesco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Invesco Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Water 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 Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Water has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Invesco Global go up and down completely randomly.

Pair Corralation between Innovator ETFs and Invesco Global

Given the investment horizon of 90 days Innovator ETFs Trust is expected to under-perform the Invesco Global. But the etf apears to be less risky and, when comparing its historical volatility, Innovator ETFs Trust is 1.02 times less risky than Invesco Global. The etf trades about -0.05 of its potential returns per unit of risk. The Invesco Global Water is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,920  in Invesco Global Water on December 22, 2024 and sell it today you would earn a total of  126.00  from holding Invesco Global Water or generate 3.21% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Invesco Global Water

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.

Invesco Global Water

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Global Water are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Invesco Global is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innovator ETFs and Invesco Global

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

The idea behind Innovator ETFs Trust and Invesco Global Water 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.