Correlation Between Innovator Loup and ProShares Short

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

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

Diversification Opportunities for Innovator Loup and ProShares Short

-0.94

Correlation Coefficient

Innovator Loup  ProShares Short

Pay attention - limited upside

The 3 months correlation between Innovator and ProShares is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Loup Frontier and ProShares Short QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short QQQ and Innovator Loup 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 Loup Frontier are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short QQQ has no effect on the direction of Innovator Loup i.e., Innovator Loup and ProShares Short go up and down completely randomly.

Pair Corralation between Innovator Loup and ProShares Short

Given the investment horizon of 90 days Innovator Loup Frontier is expected to generate 1.73 times more return on investment than ProShares Short. However, Innovator Loup is 1.73 times more volatile than ProShares Short QQQ. It trades about -0.03 of its potential returns per unit of risk. ProShares Short QQQ is currently generating about -0.09 per unit of risk. If you would invest  5,602  in Innovator Loup Frontier on September 23, 2024 and sell it today you would lose (102.00) from holding Innovator Loup Frontier or give up 1.82% of portfolio value over 90 days.

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

Innovator Loup Frontier  vs.  ProShares Short QQQ

Innovator Loup Frontier

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Loup Frontier are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Loup reported solid returns over the last few months and may actually be approaching a breakup point.

ProShares Short QQQ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Innovator Loup and ProShares Short

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

The idea behind Innovator Loup Frontier and ProShares Short QQQ 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.