Correlation Between Innovator and American Century

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

By analyzing existing cross correlation between Innovator SP Investment and American Century ETF, you can compare the effects of market volatilities on Innovator and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and American Century.

Diversification Opportunities for Innovator and American Century

0.88

Correlation Coefficient

Innovator  American Century

Very poor diversification

The 3 months correlation between Innovator and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP Investment and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 Investment are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of Innovator i.e., Innovator and American Century go up and down completely randomly.

Pair Corralation between Innovator and American Century

Given the investment horizon of 90 days Innovator is expected to generate 1.85 times less return on investment than American Century. But when comparing it to its historical volatility, Innovator SP Investment is 2.47 times less risky than American Century. It trades about 0.14 of its potential returns per unit of risk. American Century ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,739  in American Century ETF on May 4, 2025 and sell it today you would earn a total of  394.00  from holding American Century ETF or generate 8.31% return on investment over 90 days.

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

Innovator SP Investment  vs.  American Century ETF

Innovator SP Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

American Century ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Innovator and American Century

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

The idea behind Innovator SP Investment and American Century ETF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.