Correlation Between AES and Innovator Nasdaq

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

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

Diversification Opportunities for AES and Innovator Nasdaq

0.89

Correlation Coefficient

AES  Innovator Nasdaq

Very poor diversification

The 3 months correlation between AES and Innovator is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Innovator Nasdaq 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Nasdaq 100 and AES 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 The AES are associated (or correlated) with Innovator Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Nasdaq 100 has no effect on the direction of AES i.e., AES and Innovator Nasdaq go up and down completely randomly.

Pair Corralation between AES and Innovator Nasdaq

Considering the 90-day investment horizon The AES is expected to generate 15.16 times more return on investment than Innovator Nasdaq. However, AES is 15.16 times more volatile than Innovator Nasdaq 100 Power. It trades about 0.16 of its potential returns per unit of risk. Innovator Nasdaq 100 Power is currently generating about 0.26 per unit of risk. If you would invest  994.00  in The AES on May 25, 2025 and sell it today you would earn a total of  355.00  from holding The AES or generate 35.71% return on investment over 90 days.

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

The AES  vs.  Innovator Nasdaq 100 Power

AES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Innovator Nasdaq 100

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Nasdaq 100 Power are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Nasdaq is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AES and Innovator Nasdaq

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

The idea behind The AES and Innovator Nasdaq 100 Power 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.