Correlation Between Innovator ETFs and ProShares UltraShort

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Can any of the company-specific risk be diversified away by investing in both Innovator ETFs 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 ETFs 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 ETFs Trust and ProShares UltraShort Technology, you can compare the effects of market volatilities on Innovator ETFs 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 ETFs with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and ProShares UltraShort.

Diversification Opportunities for Innovator ETFs and ProShares UltraShort

-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Innovator and ProShares is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and ProShares UltraShort Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Innovator ETFs 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 ETFs Trust 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 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Innovator ETFs and ProShares UltraShort

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.06 times more return on investment than ProShares UltraShort. However, Innovator ETFs Trust is 17.98 times less risky than ProShares UltraShort. It trades about 0.46 of its potential returns per unit of risk. ProShares UltraShort Technology is currently generating about -0.17 per unit of risk. If you would invest  2,732  in Innovator ETFs Trust on September 1, 2024 and sell it today you would earn a total of  34.00  from holding Innovator ETFs Trust or generate 1.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Innovator ETFs Trust  vs.  ProShares UltraShort Technolog

 Performance 
       Timeline  
Innovator ETFs Trust 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, Innovator ETFs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
ProShares UltraShort 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares UltraShort Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical and fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Innovator ETFs and ProShares UltraShort Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Innovator ETFs and ProShares UltraShort

The main advantage of trading using opposite Innovator ETFs and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs 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 ETFs Trust and ProShares UltraShort Technology 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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