Correlation Between Innovator Loup and IShares Semiconductor

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

By analyzing existing cross correlation between Innovator Loup Frontier and iShares Semiconductor ETF, you can compare the effects of market volatilities on Innovator Loup and IShares Semiconductor 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 Loup with a short position of IShares Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Loup and IShares Semiconductor.

Diversification Opportunities for Innovator Loup and IShares Semiconductor

-0.53

Correlation Coefficient

Innovator Loup  IShares Semiconductor

Excellent diversification

The 3 months correlation between Innovator and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Loup Frontier and iShares Semiconductor ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Semiconductor ETF and Innovator Loup 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 Loup Frontier are associated (or correlated) with IShares Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Semiconductor ETF has no effect on the direction of Innovator Loup i.e., Innovator Loup and IShares Semiconductor go up and down completely randomly.

Pair Corralation between Innovator Loup and IShares Semiconductor

Given the investment horizon of 90 days Innovator Loup Frontier is expected to generate 0.94 times more return on investment than IShares Semiconductor. However, Innovator Loup Frontier is 1.07 times less risky than IShares Semiconductor. It trades about 0.15 of its potential returns per unit of risk. iShares Semiconductor ETF is currently generating about -0.03 per unit of risk. If you would invest  4,690  in Innovator Loup Frontier on September 23, 2024 and sell it today you would earn a total of  810.00  from holding Innovator Loup Frontier or generate 17.27% return on investment over 90 days.

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

Innovator Loup Frontier  vs.  iShares Semiconductor ETF

Innovator Loup Frontier

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Loup Frontier are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Loup reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Semiconductor ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innovator Loup and IShares Semiconductor

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

The idea behind Innovator Loup Frontier and iShares Semiconductor ETF 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.