Correlation Between Innovator ETFs and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort MSCI, you can compare the effects of market volatilities on Innovator ETFs and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and ProShares UltraShort.
Diversification Opportunities for Innovator ETFs and ProShares UltraShort
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innovator and ProShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Innovator ETFs and ProShares UltraShort
Given the investment horizon of 90 days Innovator ETFs is expected to generate 8.54 times less return on investment than ProShares UltraShort. But when comparing it to its historical volatility, Innovator ETFs Trust is 8.39 times less risky than ProShares UltraShort. It trades about 0.2 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,555 in ProShares UltraShort MSCI on August 30, 2024 and sell it today you would earn a total of 150.00 from holding ProShares UltraShort MSCI or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| Innovator ETFs Trust |
| ProShares UltraShort MSCI |
Innovator ETFs and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and ProShares UltraShort
The main advantage of trading using opposite Innovator ETFs and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Innovator ETFs vs. Innovator Growth Accelerated | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator ETFs Trust |
| ProShares UltraShort vs. AXS TSLA Bear | ProShares UltraShort vs. ProShares Trust | ProShares UltraShort vs. ProShares UltraShort Bloomberg |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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