Correlation Between Innovator IBD and VanEck BDC

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Can any of the company-specific risk be diversified away by investing in both Innovator IBD and VanEck BDC 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 IBD and VanEck BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator IBD 50 and VanEck BDC Income, you can compare the effects of market volatilities on Innovator IBD and VanEck BDC 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 IBD with a short position of VanEck BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator IBD and VanEck BDC.

Diversification Opportunities for Innovator IBD and VanEck BDC

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Innovator and VanEck is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Innovator IBD 50 and VanEck BDC Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck BDC Income and Innovator IBD 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 IBD 50 are associated (or correlated) with VanEck BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck BDC Income has no effect on the direction of Innovator IBD i.e., Innovator IBD and VanEck BDC go up and down completely randomly.

Pair Corralation between Innovator IBD and VanEck BDC

Given the investment horizon of 90 days Innovator IBD 50 is expected to under-perform the VanEck BDC. In addition to that, Innovator IBD is 3.82 times more volatile than VanEck BDC Income. It trades about -0.13 of its total potential returns per unit of risk. VanEck BDC Income is currently generating about 0.03 per unit of volatility. If you would invest  1,667  in VanEck BDC Income on September 23, 2024 and sell it today you would earn a total of  5.00  from holding VanEck BDC Income or generate 0.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Innovator IBD 50  vs.  VanEck BDC Income

 Performance 
       Timeline  
Innovator IBD 50 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Innovator IBD 50 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Innovator IBD may actually be approaching a critical reversion point that can send shares even higher in January 2025.
VanEck BDC Income 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VanEck BDC Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, VanEck BDC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Innovator IBD and VanEck BDC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Innovator IBD and VanEck BDC

The main advantage of trading using opposite Innovator IBD and VanEck BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator IBD position performs unexpectedly, VanEck BDC 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 VanEck BDC will offset losses from the drop in VanEck BDC's long position.
The idea behind Innovator IBD 50 and VanEck BDC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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