Correlation Between Innovator ETFs and ProShares UltraShort

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 MSCI, 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

-0.83

Correlation Coefficient

Innovator ETFs  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between Innovator and ProShares is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust 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 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 MSCI 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 0.27 times more return on investment than ProShares UltraShort. However, Innovator ETFs Trust is 3.67 times less risky than ProShares UltraShort. It trades about 0.18 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.13 per unit of risk. If you would invest  2,866  in Innovator ETFs Trust on December 30, 2024 and sell it today you would earn a total of  164.00  from holding Innovator ETFs Trust or generate 5.72% return on investment over 90 days.

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

Innovator ETFs Trust  vs.  ProShares UltraShort MSCI

Innovator ETFs Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator ETFs Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Innovator ETFs is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ProShares UltraShort MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

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 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.