Correlation Between ProShares Big and Innovator Long

Can any of the company-specific risk be diversified away by investing in both ProShares Big and Innovator Long 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 Big and Innovator Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Big Data and Innovator Long Term, you can compare the effects of market volatilities on ProShares Big and Innovator Long 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 Big with a short position of Innovator Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Big and Innovator Long.

Diversification Opportunities for ProShares Big and Innovator Long

-0.51

Correlation Coefficient

ProShares Big  Innovator Long

Excellent diversification

The 3 months correlation between ProShares and Innovator is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Big Data and Innovator Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Long Term and ProShares Big 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 Big Data are associated (or correlated) with Innovator Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Long Term has no effect on the direction of ProShares Big i.e., ProShares Big and Innovator Long go up and down completely randomly.

Pair Corralation between ProShares Big and Innovator Long

Considering the 90-day investment horizon ProShares Big Data is expected to under-perform the Innovator Long. In addition to that, ProShares Big is 3.14 times more volatile than Innovator Long Term. It trades about -0.06 of its total potential returns per unit of risk. Innovator Long Term is currently generating about 0.04 per unit of volatility. If you would invest  1,995  in Innovator Long Term on December 27, 2024 and sell it today you would earn a total of  34.00  from holding Innovator Long Term or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ProShares Big Data  vs.  Innovator Long Term

ProShares Big Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Big Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Innovator Long Term

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Long Term are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking indicators, Innovator Long is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Big and Innovator Long

The main advantage of trading using opposite ProShares Big and Innovator Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Big position performs unexpectedly, Innovator Long 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 Long will offset losses from the drop in Innovator Long's long position.

The idea behind ProShares Big Data and Innovator Long Term 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.