Correlation Between Innovator Nasdaq and Tidal ETF

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

By analyzing existing cross correlation between Innovator Nasdaq 100 Power and Tidal ETF Trust, you can compare the effects of market volatilities on Innovator Nasdaq and Tidal ETF 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 Nasdaq with a short position of Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Nasdaq and Tidal ETF.

Diversification Opportunities for Innovator Nasdaq and Tidal ETF

-0.84

Correlation Coefficient

Innovator Nasdaq  Tidal ETF

Pay attention - limited upside

The 3 months correlation between Innovator and Tidal is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Nasdaq 100 Power and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust and Innovator Nasdaq 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 Nasdaq 100 Power are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of Innovator Nasdaq i.e., Innovator Nasdaq and Tidal ETF go up and down completely randomly.

Pair Corralation between Innovator Nasdaq and Tidal ETF

Given the investment horizon of 90 days Innovator Nasdaq 100 Power is expected to generate 0.79 times more return on investment than Tidal ETF. However, Innovator Nasdaq 100 Power is 1.27 times less risky than Tidal ETF. It trades about 0.2 of its potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.23 per unit of risk. If you would invest  5,976  in Innovator Nasdaq 100 Power on September 14, 2024 and sell it today you would earn a total of  371.00  from holding Innovator Nasdaq 100 Power or generate 6.21% return on investment over 90 days.

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

Innovator Nasdaq 100 Power  vs.  Tidal ETF Trust

Innovator Nasdaq 100

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Nasdaq 100 Power are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Innovator Nasdaq is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Innovator Nasdaq and Tidal ETF

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

The idea behind Innovator Nasdaq 100 Power and Tidal ETF 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.