Correlation Between Innovator ETFs and Vanguard Small

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

Diversification Opportunities for Innovator ETFs and Vanguard Small

0.95

Correlation Coefficient

Innovator ETFs  Vanguard Small

Almost no diversification

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

Pair Corralation between Innovator ETFs and Vanguard Small

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.69 times more return on investment than Vanguard Small. However, Innovator ETFs Trust is 1.46 times less risky than Vanguard Small. It trades about 0.32 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.2 per unit of risk. If you would invest  2,830  in Innovator ETFs Trust on May 1, 2025 and sell it today you would earn a total of  423.00  from holding Innovator ETFs Trust or generate 14.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Innovator ETFs Trust  vs.  Vanguard Small Cap Index

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 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innovator ETFs exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Vanguard Small sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovator ETFs and Vanguard Small

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

The idea behind Innovator ETFs Trust and Vanguard Small Cap Index 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.