Correlation Between Innovator ETFs and TrueShares Structured

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

Diversification Opportunities for Innovator ETFs and TrueShares Structured

-0.13

Correlation Coefficient

Innovator ETFs  TrueShares Structured

Good diversification

The 3 months correlation between Innovator and TrueShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and TrueShares Structured Outcome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Structured 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 TrueShares Structured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Structured has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and TrueShares Structured go up and down completely randomly.

Pair Corralation between Innovator ETFs and TrueShares Structured

Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.2 times less return on investment than TrueShares Structured. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.43 times less risky than TrueShares Structured. It trades about 0.13 of its potential returns per unit of risk. TrueShares Structured Outcome is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,912  in TrueShares Structured Outcome on September 4, 2024 and sell it today you would earn a total of  1,132  from holding TrueShares Structured Outcome or generate 38.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.35%
Values	Daily Returns

Innovator ETFs Trust  vs.  TrueShares Structured Outcome

Innovator ETFs Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TrueShares Structured

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Structured Outcome are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, TrueShares Structured may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator ETFs and TrueShares Structured

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

The idea behind Innovator ETFs Trust and TrueShares Structured Outcome 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.