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 Yen and Innovator Equity Accelerated, 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
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Innovator is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Innovator Equity Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Acc 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 Yen 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 Acc 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 Yen is expected to under-perform the Innovator Equity. In addition to that, ProShares Ultra is 2.22 times more volatile than Innovator Equity Accelerated. It trades about -0.08 of its total potential returns per unit of risk. Innovator Equity Accelerated is currently generating about 0.11 per unit of volatility. If you would invest 2,512 in Innovator Equity Accelerated on October 9, 2024 and sell it today you would earn a total of 970.60 from holding Innovator Equity Accelerated or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ProShares Ultra Yen vs. Innovator Equity Accelerated
Performance |
| Timeline |
| ProShares Ultra Yen |
| Innovator Equity Acc |
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 Euro | ProShares Ultra vs. ProShares UltraShort Yen | ProShares Ultra vs. ProShares Ultra Telecommunications | ProShares Ultra vs. ProShares Ultra Consumer |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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