Correlation Between Innovator ETFs and Innovator Uncapped

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

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

Diversification Opportunities for Innovator ETFs and Innovator Uncapped

0.7

Correlation Coefficient

Innovator ETFs  Innovator Uncapped

Poor diversification

The 3 months correlation between Innovator and Innovator is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and Innovator Uncapped Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Uncapped and Innovator ETFs 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 ETFs Trust are associated (or correlated) with Innovator Uncapped. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Uncapped has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and Innovator Uncapped go up and down completely randomly.

Pair Corralation between Innovator ETFs and Innovator Uncapped

Given the investment horizon of 90 days Innovator ETFs is expected to generate 2.85 times less return on investment than Innovator Uncapped. But when comparing it to its historical volatility, Innovator ETFs Trust is 2.13 times less risky than Innovator Uncapped. It trades about 0.14 of its potential returns per unit of risk. Innovator Uncapped Accelerated is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,791  in Innovator Uncapped Accelerated on September 12, 2024 and sell it today you would earn a total of  449.00  from holding Innovator Uncapped Accelerated or generate 11.84% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  Innovator Uncapped Accelerated

Innovator ETFs Trust

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Innovator Uncapped

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Uncapped Accelerated are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Uncapped may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Innovator ETFs and Innovator Uncapped

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

The idea behind Innovator ETFs Trust and Innovator Uncapped 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.