Correlation Between ProShares Ultra and Innovator Hedged
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Innovator Hedged 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 Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Semiconductors and Innovator Hedged Nasdaq 100, you can compare the effects of market volatilities on ProShares Ultra and Innovator Hedged 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 Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Innovator Hedged.
Diversification Opportunities for ProShares Ultra and Innovator Hedged
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Innovator is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Innovator Hedged Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Hedged Nasdaq 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 Semiconductors are associated (or correlated) with Innovator Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Hedged Nasdaq has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Innovator Hedged go up and down completely randomly.
Pair Corralation between ProShares Ultra and Innovator Hedged
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.2 times less return on investment than Innovator Hedged. In addition to that, ProShares Ultra is 5.64 times more volatile than Innovator Hedged Nasdaq 100. It trades about 0.04 of its total potential returns per unit of risk. Innovator Hedged Nasdaq 100 is currently generating about 0.27 per unit of volatility. If you would invest 2,542 in Innovator Hedged Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Innovator Hedged Nasdaq 100 or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Innovator Hedged Nasdaq 100
Performance |
| Timeline |
| ProShares Ultra Semi |
| Innovator Hedged Nasdaq |
ProShares Ultra and Innovator Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Innovator Hedged
The main advantage of trading using opposite ProShares Ultra and Innovator Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Innovator Hedged 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 Hedged will offset losses from the drop in Innovator Hedged's long position.| ProShares Ultra vs. ProShares Ultra Technology | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Health |
| Innovator Hedged vs. Core Alternative ETF | Innovator Hedged vs. Invesco SP 500 | Innovator Hedged vs. ETF Series Solutions | Innovator Hedged vs. WisdomTree Target Range |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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