Correlation Between Innovator ETFs and Innovator Growth

Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and Innovator Growth 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 Innovator Growth 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 Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on Innovator ETFs and Innovator Growth 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 Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and Innovator Growth.

Diversification Opportunities for Innovator ETFs and Innovator Growth

0.95

Correlation Coefficient

Innovator ETFs  Innovator Growth

Almost no diversification

The 3 months correlation between Innovator and Innovator is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Growth go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator Growth

Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.91 times less return on investment than Innovator Growth. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.19 times less risky than Innovator Growth. It trades about 0.14 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,504  in Innovator Growth 100 Accelerated on September 14, 2024 and sell it today you would earn a total of  271.92  from holding Innovator Growth 100 Accelerated or generate 7.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Innovator ETFs Trust  vs.  Innovator Growth 100 Accelerat

Innovator ETFs Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 11 (%) 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.

Innovator Growth 100

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator ETFs and Innovator Growth

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

The idea behind Innovator ETFs Trust and Innovator Growth 100 Accelerated 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.