Correlation Between Innovator and BlackRock ETF

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

By analyzing existing cross correlation between Innovator SP 500 and BlackRock ETF Trust, you can compare the effects of market volatilities on Innovator and BlackRock 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 with a short position of BlackRock ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and BlackRock ETF.

Diversification Opportunities for Innovator and BlackRock ETF

0.99

Correlation Coefficient

Innovator  BlackRock ETF

No risk reduction

The 3 months correlation between Innovator and BlackRock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and BlackRock ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ETF Trust and Innovator 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 SP 500 are associated (or correlated) with BlackRock ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ETF Trust has no effect on the direction of Innovator i.e., Innovator and BlackRock ETF go up and down completely randomly.

Pair Corralation between Innovator and BlackRock ETF

Given the investment horizon of 90 days Innovator is expected to generate 2.19 times less return on investment than BlackRock ETF. But when comparing it to its historical volatility, Innovator SP 500 is 2.5 times less risky than BlackRock ETF. It trades about 0.29 of its potential returns per unit of risk. BlackRock ETF Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,930  in BlackRock ETF Trust on September 2, 2024 and sell it today you would earn a total of  209.00  from holding BlackRock ETF Trust or generate 7.13% return on investment over 90 days.

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

Innovator SP 500  vs.  BlackRock ETF Trust

Innovator SP 500

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Innovator is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

BlackRock ETF Trust

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ETF Trust are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, BlackRock ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator and BlackRock ETF

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

The idea behind Innovator SP 500 and BlackRock 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.