Correlation Between Innovator and Innovator MSCI
Can any of the company-specific risk be diversified away by investing in both Innovator 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 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 SP 500 and Innovator MSCI EAFE, you can compare the effects of market volatilities on Innovator 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 with a short position of Innovator MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator and Innovator MSCI.
Diversification Opportunities for Innovator and Innovator MSCI
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innovator and Innovator is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Innovator SP 500 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 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 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 i.e., Innovator and Innovator MSCI go up and down completely randomly.
Pair Corralation between Innovator and Innovator MSCI
Given the investment horizon of 90 days Innovator SP 500 is expected to generate 0.37 times more return on investment than Innovator MSCI. However, Innovator SP 500 is 2.7 times less risky than Innovator MSCI. It trades about 0.29 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 4,154 in Innovator SP 500 on August 31, 2024 and sell it today you would earn a total of 44.00 from holding Innovator SP 500 or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator SP 500 vs. Innovator MSCI EAFE
Performance |
| Timeline |
| Innovator SP 500 |
| Innovator MSCI EAFE |
Innovator and Innovator MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator and Innovator MSCI
The main advantage of trading using opposite Innovator and Innovator MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator 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 vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 | Innovator vs. Innovator SP 500 |
| Innovator MSCI vs. Innovator MSCI Emerging | Innovator MSCI vs. Innovator Russell 2000 | Innovator MSCI vs. Innovator SP 500 | Innovator MSCI vs. Innovator Nasdaq 100 Power |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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