Correlation Between Innovator Equity and AIM ETF

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

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

Diversification Opportunities for Innovator Equity and AIM ETF

1.0

Correlation Coefficient

Innovator Equity  AIM ETF

No risk reduction

The 3 months correlation between Innovator and AIM is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Power and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products and Innovator Equity 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 Equity Power are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Innovator Equity i.e., Innovator Equity and AIM ETF go up and down completely randomly.

Pair Corralation between Innovator Equity and AIM ETF

Given the investment horizon of 90 days Innovator Equity is expected to generate 1.05 times less return on investment than AIM ETF. In addition to that, Innovator Equity is 1.03 times more volatile than AIM ETF Products. It trades about 0.21 of its total potential returns per unit of risk. AIM ETF Products is currently generating about 0.23 per unit of volatility. If you would invest  2,695  in AIM ETF Products on September 3, 2024 and sell it today you would earn a total of  138.00  from holding AIM ETF Products or generate 5.12% return on investment over 90 days.

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

Innovator Equity Power  vs.  AIM ETF Products

Innovator Equity Power

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Equity Power are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Innovator Equity is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AIM ETF Products

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AIM ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Innovator Equity and AIM ETF

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

The idea behind Innovator Equity Power and AIM ETF Products 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.