Correlation Between Innovator IBD and UBS AG

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

By analyzing existing cross correlation between Innovator IBD 50 and UBS AG London, you can compare the effects of market volatilities on Innovator IBD and UBS AG 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 IBD with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator IBD and UBS AG.

Diversification Opportunities for Innovator IBD and UBS AG

0.77

Correlation Coefficient

Innovator IBD  UBS AG

Poor diversification

The 3 months correlation between Innovator and UBS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Innovator IBD 50 and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and Innovator IBD 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 IBD 50 are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of Innovator IBD i.e., Innovator IBD and UBS AG go up and down completely randomly.

Pair Corralation between Innovator IBD and UBS AG

If you would invest  2,652  in Innovator IBD 50 on October 1, 2024 and sell it today you would earn a total of  342.00  from holding Innovator IBD 50 or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Innovator IBD 50  vs.  UBS AG London

Innovator IBD 50

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator IBD 50 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Innovator IBD showed solid returns over the last few months and may actually be approaching a breakup point.

UBS AG London

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS AG London has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, UBS AG is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Innovator IBD and UBS AG

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

The idea behind Innovator IBD 50 and UBS AG London 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.