Correlation Between Innovator ETFs and First Trust

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

Diversification Opportunities for Innovator ETFs and First Trust

-0.81

Correlation Coefficient

Innovator ETFs  First Trust

Pay attention - limited upside

The 3 months correlation between Innovator and First is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and First Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Small 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Small has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and First Trust go up and down completely randomly.

Pair Corralation between Innovator ETFs and First Trust

If you would invest  2,978  in Innovator ETFs Trust on May 11, 2025 and sell it today you would earn a total of  295.00  from holding Innovator ETFs Trust or generate 9.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Innovator ETFs Trust  vs.  First Trust Small

Innovator ETFs Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovator ETFs may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Trust Small

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Small has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Innovator ETFs and First Trust

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

The idea behind Innovator ETFs Trust and First Trust Small 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.