Correlation Between FT Cboe and Innovator Premium

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

By analyzing existing cross correlation between FT Cboe Vest and Innovator Premium Income, you can compare the effects of market volatilities on FT Cboe and Innovator Premium 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 FT Cboe with a short position of Innovator Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Innovator Premium.

Diversification Opportunities for FT Cboe and Innovator Premium

0.98

Correlation Coefficient

FT Cboe  Innovator Premium

Almost no diversification

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

Pair Corralation between FT Cboe and Innovator Premium

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 2.16 times more return on investment than Innovator Premium. However, FT Cboe is 2.16 times more volatile than Innovator Premium Income. It trades about 0.14 of its potential returns per unit of risk. Innovator Premium Income is currently generating about 0.16 per unit of risk. If you would invest  4,165  in FT Cboe Vest on September 23, 2024 and sell it today you would earn a total of  100.00  from holding FT Cboe Vest or generate 2.4% return on investment over 90 days.

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

FT Cboe Vest  vs.  Innovator Premium Income

FT Cboe Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Innovator Premium Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Premium Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Innovator Premium is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with FT Cboe and Innovator Premium

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

The idea behind FT Cboe Vest and Innovator Premium Income 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.