Correlation Between UBS ETRACS and Innovator Growth

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

By analyzing existing cross correlation between UBS ETRACS and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on UBS ETRACS and Innovator Growth 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 UBS ETRACS with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Innovator Growth.

Diversification Opportunities for UBS ETRACS and Innovator Growth

-0.56

Correlation Coefficient

UBS ETRACS  Innovator Growth

Excellent diversification

The 3 months correlation between UBS and Innovator is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and UBS ETRACS 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 UBS ETRACS are associated (or correlated) with Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Innovator Growth go up and down completely randomly.

Pair Corralation between UBS ETRACS and Innovator Growth

Given the investment horizon of 90 days UBS ETRACS is expected to generate 17.98 times more return on investment than Innovator Growth. However, UBS ETRACS is 17.98 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.05 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about -0.08 per unit of risk. If you would invest  1,936  in UBS ETRACS on December 5, 2024 and sell it today you would earn a total of  46.00  from holding UBS ETRACS or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

UBS ETRACS   vs.  Innovator Growth 100 Accelerat

UBS ETRACS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETRACS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, UBS ETRACS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Innovator Growth 100

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Growth is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with UBS ETRACS and Innovator Growth

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

The idea behind UBS ETRACS and Innovator Growth 100 Accelerated 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.