Correlation Between ProShares Ultra and Innovator
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Innovator 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 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 20 Year, you can compare the effects of market volatilities on ProShares Ultra and Innovator 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Innovator.
Diversification Opportunities for ProShares Ultra and Innovator
-0.83 | Correlation Coefficient |
Pay attention - limited upside
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 Semiconductors and Innovator 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator 20 Year 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator 20 Year has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Innovator go up and down completely randomly.
Pair Corralation between ProShares Ultra and Innovator
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Innovator. In addition to that, ProShares Ultra is 5.51 times more volatile than Innovator 20 Year. It trades about -0.11 of its total potential returns per unit of risk. Innovator 20 Year is currently generating about 0.04 per unit of volatility. If you would invest 2,013 in Innovator 20 Year on August 29, 2024 and sell it today you would earn a total of 14.00 from holding Innovator 20 Year or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Innovator 20 Year
Performance |
| Timeline |
| ProShares Ultra Semi |
| Innovator 20 Year |
ProShares Ultra and Innovator Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Innovator
The main advantage of trading using opposite ProShares Ultra and Innovator positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Innovator 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 will offset losses from the drop in Innovator's long position.| ProShares Ultra vs. ABIVAX Socit Anonyme | ProShares Ultra vs. Morningstar Unconstrained Allocation | ProShares Ultra vs. SPACE | ProShares Ultra vs. Knife River |
| Innovator vs. Innovator Long Term | Innovator vs. Northern Lights | Innovator vs. Innovator Russell 2000 | Innovator vs. TrueShares Structured Outcome |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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