Correlation Between Innovator MSCI and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Innovator MSCI and Innovator ETFs 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 MSCI and Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator MSCI EAFE and Innovator ETFs Trust, you can compare the effects of market volatilities on Innovator MSCI and Innovator ETFs 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 MSCI with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator MSCI and Innovator ETFs.
Diversification Opportunities for Innovator MSCI and Innovator ETFs
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innovator and Innovator is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Innovator MSCI EAFE and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust and Innovator MSCI 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 MSCI EAFE are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Innovator MSCI i.e., Innovator MSCI and Innovator ETFs go up and down completely randomly.
Pair Corralation between Innovator MSCI and Innovator ETFs
Given the investment horizon of 90 days Innovator MSCI is expected to generate 1.15 times less return on investment than Innovator ETFs. But when comparing it to its historical volatility, Innovator MSCI EAFE is 1.14 times less risky than Innovator ETFs. It trades about 0.14 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,865 in Innovator ETFs Trust on October 20, 2024 and sell it today you would earn a total of 30.00 from holding Innovator ETFs Trust or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Innovator MSCI EAFE vs. Innovator ETFs Trust
Performance |
| Timeline |
| Innovator MSCI EAFE |
| Innovator ETFs Trust |
Innovator MSCI and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator MSCI and Innovator ETFs
The main advantage of trading using opposite Innovator MSCI and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator MSCI position performs unexpectedly, Innovator ETFs 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 ETFs will offset losses from the drop in Innovator ETFs' long position.| Innovator MSCI vs. Innovator ETFs Trust | Innovator MSCI vs. First Trust Cboe | Innovator MSCI vs. FT Cboe Vest | Innovator MSCI vs. Innovator SP 500 |
| Innovator ETFs vs. JPMorgan Fundamental Data | Innovator ETFs vs. Matthews China Discovery | Innovator ETFs vs. Davis Select International | Innovator ETFs vs. Dimensional ETF Trust |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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