Correlation Between ProShares Ultra and Innovator Premium

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

Diversification Opportunities for ProShares Ultra and Innovator Premium

0.76

Correlation Coefficient

ProShares Ultra  Innovator Premium

Poor diversification

The 3 months correlation between ProShares and Innovator is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Innovator Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Premium Income 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 Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Premium Income has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Innovator Premium go up and down completely randomly.

Pair Corralation between ProShares Ultra and Innovator Premium

Considering the 90-day investment horizon ProShares Ultra Yen is expected to generate 10.6 times more return on investment than Innovator Premium. However, ProShares Ultra is 10.6 times more volatile than Innovator Premium Income. It trades about 0.13 of its potential returns per unit of risk. Innovator Premium Income is currently generating about 0.18 per unit of risk. If you would invest  2,035  in ProShares Ultra Yen on December 22, 2024 and sell it today you would earn a total of  172.00  from holding ProShares Ultra Yen or generate 8.45% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Innovator Premium Income

ProShares Ultra Yen

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Yen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Innovator Premium Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Premium Income are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Innovator Premium is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Ultra and Innovator Premium

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

The idea behind ProShares Ultra Yen and Innovator Premium Income 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.