Correlation Between Innovator Growth and Vert Global

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

By analyzing existing cross correlation between Innovator Growth 100 Accelerated and Vert Global Sustainable, you can compare the effects of market volatilities on Innovator Growth and Vert Global 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 Growth with a short position of Vert Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Growth and Vert Global.

Diversification Opportunities for Innovator Growth and Vert Global

-0.6

Correlation Coefficient

Innovator Growth  Vert Global

Excellent diversification

The 3 months correlation between Innovator and Vert is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Growth 100 Accelerat and Vert Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vert Global Sustainable and Innovator Growth 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 Growth 100 Accelerated are associated (or correlated) with Vert Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vert Global Sustainable has no effect on the direction of Innovator Growth i.e., Innovator Growth and Vert Global go up and down completely randomly.

Pair Corralation between Innovator Growth and Vert Global

Given the investment horizon of 90 days Innovator Growth 100 Accelerated is expected to generate 0.8 times more return on investment than Vert Global. However, Innovator Growth 100 Accelerated is 1.26 times less risky than Vert Global. It trades about 0.14 of its potential returns per unit of risk. Vert Global Sustainable is currently generating about 0.05 per unit of risk. If you would invest  2,220  in Innovator Growth 100 Accelerated on September 22, 2024 and sell it today you would earn a total of  1,521  from holding Innovator Growth 100 Accelerated or generate 68.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	53.32%
Values	Daily Returns

Innovator Growth 100 Accelerat  vs.  Vert Global Sustainable

Innovator Growth 100

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Growth is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vert Global Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vert Global Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Innovator Growth and Vert Global

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

The idea behind Innovator Growth 100 Accelerated and Vert Global Sustainable 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.