Correlation Between IShares MSCI and Innovator Equity

Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Innovator Equity 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 IShares MSCI and Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares MSCI China and Innovator Equity Buffer, you can compare the effects of market volatilities on IShares MSCI and Innovator Equity 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 IShares MSCI with a short position of Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Innovator Equity.

Diversification Opportunities for IShares MSCI and Innovator Equity

-0.51

Correlation Coefficient

IShares MSCI  Innovator Equity

Excellent diversification

The 3 months correlation between IShares and Innovator is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI China and Innovator Equity Buffer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Buffer and IShares 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 iShares MSCI China are associated (or correlated) with Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Buffer has no effect on the direction of IShares MSCI i.e., IShares MSCI and Innovator Equity go up and down completely randomly.

Pair Corralation between IShares MSCI and Innovator Equity

Given the investment horizon of 90 days iShares MSCI China is expected to under-perform the Innovator Equity. In addition to that, IShares MSCI is 5.74 times more volatile than Innovator Equity Buffer. It trades about 0.0 of its total potential returns per unit of risk. Innovator Equity Buffer is currently generating about 0.12 per unit of volatility. If you would invest  4,361  in Innovator Equity Buffer on September 26, 2024 and sell it today you would earn a total of  170.00  from holding Innovator Equity Buffer or generate 3.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

iShares MSCI China  vs.  Innovator Equity Buffer

iShares MSCI China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI China has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, IShares MSCI is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Innovator Equity Buffer

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Equity Buffer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Innovator Equity is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares MSCI and Innovator Equity

The main advantage of trading using opposite IShares MSCI and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Innovator Equity 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 Equity will offset losses from the drop in Innovator Equity's long position.

The idea behind iShares MSCI China and Innovator Equity Buffer 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.