Correlation Between ProShares Ultra and Innovator Growth
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 ProShares Ultra and Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Technology and Innovator Growth 100 Power, you can compare the effects of market volatilities on ProShares Ultra 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 ProShares Ultra with a short position of Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Innovator Growth.
Diversification Opportunities for ProShares Ultra and Innovator Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Innovator is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Innovator Growth 100 Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 and ProShares Ultra 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 Ultra Technology 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 ProShares Ultra i.e., ProShares Ultra and Innovator Growth go up and down completely randomly.
Pair Corralation between ProShares Ultra and Innovator Growth
Considering the 90-day investment horizon ProShares Ultra Technology is expected to generate 4.74 times more return on investment than Innovator Growth. However, ProShares Ultra is 4.74 times more volatile than Innovator Growth 100 Power. It trades about 0.2 of its potential returns per unit of risk. Innovator Growth 100 Power is currently generating about 0.29 per unit of risk. If you would invest 6,471 in ProShares Ultra Technology on September 1, 2024 and sell it today you would earn a total of 606.00 from holding ProShares Ultra Technology or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares Ultra Technology vs. Innovator Growth 100 Power
Performance |
| Timeline |
| ProShares Ultra Tech |
| Innovator Growth 100 |
ProShares Ultra and Innovator Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Innovator Growth
The main advantage of trading using opposite ProShares Ultra and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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.| ProShares Ultra vs. ProShares Ultra Health | ProShares Ultra vs. ProShares Ultra Semiconductors | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Consumer |
| Innovator Growth vs. Innovator Nasdaq 100 Power | Innovator Growth vs. Innovator Nasdaq 100 Power | Innovator Growth vs. Innovator SP 500 | Innovator Growth vs. Innovator SP 500 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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