Correlation Between Innovator Russell and Innovator MSCI
Can any of the company-specific risk be diversified away by investing in both Innovator Russell and Innovator MSCI 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 Russell and Innovator MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator Russell 2000 and Innovator MSCI EAFE, you can compare the effects of market volatilities on Innovator Russell and Innovator MSCI 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 Russell with a short position of Innovator MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Russell and Innovator MSCI.
Diversification Opportunities for Innovator Russell and Innovator MSCI
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovator and Innovator is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Russell 2000 and Innovator MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator MSCI EAFE and Innovator Russell 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 Russell 2000 are associated (or correlated) with Innovator MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator MSCI EAFE has no effect on the direction of Innovator Russell i.e., Innovator Russell and Innovator MSCI go up and down completely randomly.
Pair Corralation between Innovator Russell and Innovator MSCI
Given the investment horizon of 90 days Innovator Russell 2000 is expected to generate 1.1 times more return on investment than Innovator MSCI. However, Innovator Russell is 1.1 times more volatile than Innovator MSCI EAFE. It trades about 0.25 of its potential returns per unit of risk. Innovator MSCI EAFE is currently generating about -0.18 per unit of risk. If you would invest 2,919 in Innovator Russell 2000 on August 31, 2024 and sell it today you would earn a total of 107.00 from holding Innovator Russell 2000 or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Russell 2000 vs. Innovator MSCI EAFE
Performance |
| Timeline |
| Innovator Russell 2000 |
| Innovator MSCI EAFE |
Innovator Russell and Innovator MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Russell and Innovator MSCI
The main advantage of trading using opposite Innovator Russell and Innovator MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Russell position performs unexpectedly, Innovator MSCI 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 MSCI will offset losses from the drop in Innovator MSCI's long position.| Innovator Russell vs. Innovator ETFs Trust | Innovator Russell vs. First Trust Cboe | Innovator Russell vs. FT Cboe Vest | Innovator Russell vs. Innovator SP 500 |
| Innovator MSCI vs. Innovator ETFs Trust | Innovator MSCI vs. First Trust Cboe | Innovator MSCI vs. FT Cboe Vest | Innovator MSCI vs. Innovator SP 500 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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