Correlation Between Innovator ETFs and SoFi Select

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

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

Diversification Opportunities for Innovator ETFs and SoFi Select

0.91

Correlation Coefficient

Innovator ETFs  SoFi Select

Almost no diversification

The 3 months correlation between Innovator and SoFi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and SoFi Select 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoFi Select 500 and Innovator ETFs 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 ETFs Trust are associated (or correlated) with SoFi Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoFi Select 500 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and SoFi Select go up and down completely randomly.

Pair Corralation between Innovator ETFs and SoFi Select

Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.81 times less return on investment than SoFi Select. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.33 times less risky than SoFi Select. It trades about 0.09 of its potential returns per unit of risk. SoFi Select 500 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,763  in SoFi Select 500 on August 30, 2024 and sell it today you would earn a total of  315.00  from holding SoFi Select 500 or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Innovator ETFs Trust  vs.  SoFi Select 500

Innovator ETFs Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SoFi Select 500

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Select 500 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, SoFi Select may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Innovator ETFs and SoFi Select

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

The idea behind Innovator ETFs Trust and SoFi Select 500 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.