Correlation Between Xtrackers Municipal and Innovator
Can any of the company-specific risk be diversified away by investing in both Xtrackers Municipal and Innovator 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 Xtrackers Municipal and Innovator into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Municipal Infrastructure and Innovator SP 500, you can compare the effects of market volatilities on Xtrackers Municipal and Innovator 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 Xtrackers Municipal with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Municipal and Innovator.
Diversification Opportunities for Xtrackers Municipal and Innovator
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Innovator is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Municipal Infrastruc and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 and Xtrackers Municipal 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 Xtrackers Municipal Infrastructure are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Xtrackers Municipal i.e., Xtrackers Municipal and Innovator go up and down completely randomly.
Pair Corralation between Xtrackers Municipal and Innovator
Given the investment horizon of 90 days Xtrackers Municipal Infrastructure is expected to generate 3.92 times more return on investment than Innovator. However, Xtrackers Municipal is 3.92 times more volatile than Innovator SP 500. It trades about 0.21 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.46 per unit of risk. If you would invest 2,542 in Xtrackers Municipal Infrastructure on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Xtrackers Municipal Infrastructure or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Municipal Infrastruc vs. Innovator SP 500
Performance |
| Timeline |
| Xtrackers Municipal |
| Innovator SP 500 |
Xtrackers Municipal and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Municipal and Innovator
The main advantage of trading using opposite Xtrackers Municipal and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Municipal position performs unexpectedly, Innovator 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 will offset losses from the drop in Innovator's long position.| Xtrackers Municipal vs. VanEck Long Muni | Xtrackers Municipal vs. VanEck Short High | Xtrackers Municipal vs. VanEck CEF Municipal | Xtrackers Municipal vs. PIMCO Short Term |
| Innovator vs. Innovator ETFs Trust | Innovator vs. First Trust Cboe | Innovator vs. Innovator SP 500 | Innovator vs. Innovator Equity 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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