Correlation Between Innovator and Capital Group

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

By analyzing existing cross correlation between Innovator SP 500 and Capital Group Equity, you can compare the effects of market volatilities on Innovator and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Capital Group.

Diversification Opportunities for Innovator and Capital Group

0.45

Correlation Coefficient

Innovator  Capital Group

Very weak diversification

The 3 months correlation between Innovator and Capital is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 and Capital Group Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Equity 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 500 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Equity has no effect on the direction of Innovator i.e., Innovator and Capital Group go up and down completely randomly.

Pair Corralation between Innovator and Capital Group

Given the investment horizon of 90 days Innovator is expected to generate 1.72 times less return on investment than Capital Group. But when comparing it to its historical volatility, Innovator SP 500 is 2.99 times less risky than Capital Group. It trades about 0.13 of its potential returns per unit of risk. Capital Group Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,850  in Capital Group Equity on September 14, 2025 and sell it today you would earn a total of  122.00  from holding Capital Group Equity or generate 4.28% return on investment over 90 days.

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

Innovator SP 500  vs.  Capital Group Equity

Innovator SP 500

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Capital Group Equity

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Capital Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innovator and Capital Group

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

The idea behind Innovator SP 500 and Capital Group Equity 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.