Correlation Between Capital Group and Innovator ETFs

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

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

Diversification Opportunities for Capital Group and Innovator ETFs

-0.48

Correlation Coefficient

Capital Group  Innovator ETFs

Very good diversification

The 3 months correlation between Capital and Innovator is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Capital Group Dividend and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Capital Group 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 Capital Group Dividend are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Capital Group i.e., Capital Group and Innovator ETFs go up and down completely randomly.

Pair Corralation between Capital Group and Innovator ETFs

Given the investment horizon of 90 days Capital Group Dividend is expected to generate 0.7 times more return on investment than Innovator ETFs. However, Capital Group Dividend is 1.42 times less risky than Innovator ETFs. It trades about 0.1 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.15 per unit of risk. If you would invest  3,516  in Capital Group Dividend on September 12, 2024 and sell it today you would earn a total of  132.00  from holding Capital Group Dividend or generate 3.75% return on investment over 90 days.

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

Capital Group Dividend  vs.  Innovator ETFs Trust

Capital Group Dividend

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Dividend are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Capital Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Capital Group and Innovator ETFs

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

The idea behind Capital Group Dividend and Innovator ETFs Trust 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 CEOs Directory module to screen CEOs from public companies around the world.