Correlation Between Proshares Russell and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both Proshares Russell 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 Proshares Russell and Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and Innovator Equity Defined, you can compare the effects of market volatilities on Proshares Russell 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 Proshares Russell with a short position of Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Innovator Equity.
Diversification Opportunities for Proshares Russell and Innovator Equity
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Proshares and Innovator is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Innovator Equity Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Defined and Proshares Russell 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 Proshares Russell 2000 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 Defined has no effect on the direction of Proshares Russell i.e., Proshares Russell and Innovator Equity go up and down completely randomly.
Pair Corralation between Proshares Russell and Innovator Equity
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 20.67 times more return on investment than Innovator Equity. However, Proshares Russell is 20.67 times more volatile than Innovator Equity Defined. It trades about 0.19 of its potential returns per unit of risk. Innovator Equity Defined is currently generating about 0.25 per unit of risk. If you would invest 3,913 in Proshares Russell 2000 on September 1, 2024 and sell it today you would earn a total of 1,405 from holding Proshares Russell 2000 or generate 35.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.31% |
| Values | Daily Returns |
Proshares Russell 2000 vs. Innovator Equity Defined
Performance |
| Timeline |
| Proshares Russell 2000 |
| Innovator Equity Defined |
Proshares Russell and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and Innovator Equity
The main advantage of trading using opposite Proshares Russell and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell 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.| Proshares Russell vs. Global X Dow | Proshares Russell vs. AdvisorShares STAR Global | Proshares Russell vs. Global X Funds | Proshares Russell vs. FT Vest Dow |
| Innovator Equity vs. FT Vest Equity | Innovator Equity vs. Northern Lights | Innovator Equity vs. Dimensional International High | Innovator Equity vs. Matthews China Discovery |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |