Correlation Between Core Alternative and Innovator Hedged

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

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

Diversification Opportunities for Core Alternative and Innovator Hedged

-0.71

Correlation Coefficient

Core Alternative  Innovator Hedged

Pay attention - limited upside

The 3 months correlation between Core and Innovator is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Core Alternative ETF and Innovator Hedged Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Hedged Nasdaq and Core Alternative 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 Core Alternative ETF are associated (or correlated) with Innovator Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Hedged Nasdaq has no effect on the direction of Core Alternative i.e., Core Alternative and Innovator Hedged go up and down completely randomly.

Pair Corralation between Core Alternative and Innovator Hedged

Given the investment horizon of 90 days Core Alternative is expected to generate 13.75 times less return on investment than Innovator Hedged. In addition to that, Core Alternative is 1.02 times more volatile than Innovator Hedged Nasdaq 100. It trades about 0.01 of its total potential returns per unit of risk. Innovator Hedged Nasdaq 100 is currently generating about 0.19 per unit of volatility. If you would invest  2,437  in Innovator Hedged Nasdaq 100 on September 3, 2024 and sell it today you would earn a total of  204.00  from holding Innovator Hedged Nasdaq 100 or generate 8.37% return on investment over 90 days.

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

Core Alternative ETF  vs.  Innovator Hedged Nasdaq 100

Core Alternative ETF

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Core Alternative ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Core Alternative is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Innovator Hedged Nasdaq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Hedged Nasdaq 100 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Innovator Hedged may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Core Alternative and Innovator Hedged

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

The idea behind Core Alternative ETF and Innovator Hedged Nasdaq 100 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.