Correlation Between Innovator Equity and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Innovator Equity 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 Equity 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 Equity Accelerated and ProShares UltraShort MSCI, you can compare the effects of market volatilities on Innovator Equity 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 Equity with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator Equity and ProShares UltraShort.
Diversification Opportunities for Innovator Equity and ProShares UltraShort
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innovator and ProShares is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Equity Accelerated 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 Equity 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 Equity Accelerated 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 Equity i.e., Innovator Equity and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Innovator Equity and ProShares UltraShort
Given the investment horizon of 90 days Innovator Equity Accelerated is expected to generate 0.28 times more return on investment than ProShares UltraShort. However, Innovator Equity Accelerated is 3.59 times less risky than ProShares UltraShort. It trades about 0.11 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.03 per unit of risk. If you would invest 3,082 in Innovator Equity Accelerated on August 27, 2024 and sell it today you would earn a total of 367.00 from holding Innovator Equity Accelerated or generate 11.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator Equity Accelerated vs. ProShares UltraShort MSCI
Performance |
| Timeline |
| Innovator Equity Acc |
| ProShares UltraShort MSCI |
Innovator Equity and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator Equity and ProShares UltraShort
The main advantage of trading using opposite Innovator Equity and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Equity 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.The idea behind Innovator Equity Accelerated and ProShares UltraShort MSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |