Correlation Between Xtrackers MSCI and Innovator ETFs

Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers 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 Xtrackers MSCI Emerging and Innovator ETFs Trust, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers MSCI with a short position of Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and Innovator ETFs.

Diversification Opportunities for Xtrackers MSCI and Innovator ETFs

0.83

Correlation Coefficient

Xtrackers MSCI  Innovator ETFs

Very poor diversification

The 3 months correlation between Xtrackers and Innovator is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI Emerging 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 Xtrackers 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 Xtrackers MSCI Emerging 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 Xtrackers MSCI i.e., Xtrackers MSCI and Innovator ETFs go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Innovator ETFs

Given the investment horizon of 90 days Xtrackers MSCI Emerging is expected to generate 2.52 times more return on investment than Innovator ETFs. However, Xtrackers MSCI is 2.52 times more volatile than Innovator ETFs Trust. It trades about 0.06 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.06 per unit of risk. If you would invest  2,300  in Xtrackers MSCI Emerging on October 7, 2024 and sell it today you would earn a total of  342.00  from holding Xtrackers MSCI Emerging or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Xtrackers MSCI Emerging  vs.  Innovator ETFs Trust

Xtrackers MSCI Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers MSCI Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtrackers MSCI and Innovator ETFs

The main advantage of trading using opposite Xtrackers MSCI and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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.

The idea behind Xtrackers MSCI Emerging and Innovator ETFs Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.