Correlation Between Innovator and AllianzIM Equity

Can any of the company-specific risk be diversified away by investing in both Innovator and AllianzIM Equity 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 AllianzIM Equity 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 AllianzIM Equity Buffer15, you can compare the effects of market volatilities on Innovator and AllianzIM Equity 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 AllianzIM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and AllianzIM Equity.

Diversification Opportunities for Innovator and AllianzIM Equity

0.83

Correlation Coefficient

Innovator  AllianzIM Equity

Very poor diversification

The 3 months correlation between Innovator and AllianzIM is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and AllianzIM Equity Buffer15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Equity Buffer15 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 AllianzIM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Equity Buffer15 has no effect on the direction of Innovator i.e., Innovator and AllianzIM Equity go up and down completely randomly.

Pair Corralation between Innovator and AllianzIM Equity

Given the investment horizon of 90 days Innovator is expected to generate 1.48 times less return on investment than AllianzIM Equity. But when comparing it to its historical volatility, Innovator SP 500 is 1.55 times less risky than AllianzIM Equity. It trades about 0.21 of its potential returns per unit of risk. AllianzIM Equity Buffer15 is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,464  in AllianzIM Equity Buffer15 on September 2, 2024 and sell it today you would earn a total of  173.00  from holding AllianzIM Equity Buffer15 or generate 7.02% return on investment over 90 days.

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

Innovator SP 500  vs.  AllianzIM Equity Buffer15

Innovator SP 500

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Innovator is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AllianzIM Equity Buffer15

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AllianzIM Equity Buffer15 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, AllianzIM Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator and AllianzIM Equity

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

The idea behind Innovator SP 500 and AllianzIM Equity Buffer15 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 Commodity Directory module to find actively traded commodities issued by global exchanges.