Correlation Between Innovator ETFs and ProShares Ultra

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

Diversification Opportunities for Innovator ETFs and ProShares Ultra

1.0

Correlation Coefficient

Innovator ETFs  ProShares Ultra

No risk reduction

The 3 months correlation between Innovator and ProShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra MSCI has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and ProShares Ultra go up and down completely randomly.

Pair Corralation between Innovator ETFs and ProShares Ultra

Given the investment horizon of 90 days Innovator ETFs Trust is expected to generate 0.35 times more return on investment than ProShares Ultra. However, Innovator ETFs Trust is 2.83 times less risky than ProShares Ultra. It trades about -0.06 of its potential returns per unit of risk. ProShares Ultra MSCI is currently generating about -0.02 per unit of risk. If you would invest  2,594  in Innovator ETFs Trust on September 4, 2024 and sell it today you would lose (20.00) from holding Innovator ETFs Trust or give up 0.77% of portfolio value over 90 days.

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

Innovator ETFs Trust  vs.  ProShares Ultra MSCI

Innovator ETFs Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovator ETFs Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Innovator ETFs is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

ProShares Ultra MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innovator ETFs and ProShares Ultra

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

The idea behind Innovator ETFs Trust and ProShares Ultra 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.