Correlation Between ProShares Ultra and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 Ultra 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 Ultra Semiconductors and Innovator Equity Defined, you can compare the effects of market volatilities on ProShares Ultra 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 Ultra with a short position of Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Innovator Equity.
Diversification Opportunities for ProShares Ultra and Innovator Equity
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and Innovator is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors 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 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 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 Ultra i.e., ProShares Ultra and Innovator Equity go up and down completely randomly.
Pair Corralation between ProShares Ultra and Innovator Equity
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 34.2 times more return on investment than Innovator Equity. However, ProShares Ultra is 34.2 times more volatile than Innovator Equity Defined. It trades about 0.03 of its potential returns per unit of risk. Innovator Equity Defined is currently generating about 0.11 per unit of risk. If you would invest 6,717 in ProShares Ultra Semiconductors on October 21, 2024 and sell it today you would earn a total of 256.00 from holding ProShares Ultra Semiconductors or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.8% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Innovator Equity Defined
Performance |
| Timeline |
| ProShares Ultra Semi |
| Innovator Equity Defined |
ProShares Ultra and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Innovator Equity
The main advantage of trading using opposite ProShares Ultra and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 Ultra vs. ProShares Ultra Technology | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Basic | ProShares Ultra vs. ProShares Ultra Health |
| Innovator Equity vs. Innovator ETFs Trust | Innovator Equity vs. First Trust Cboe | Innovator Equity vs. FT Cboe Vest | Innovator Equity 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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