Correlation Between ProShares UltraShort and Inovalon Holdings

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

By analyzing existing cross correlation between ProShares UltraShort MSCI and Inovalon Holdings, you can compare the effects of market volatilities on ProShares UltraShort and Inovalon Holdings 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 UltraShort with a short position of Inovalon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Inovalon Holdings.

Diversification Opportunities for ProShares UltraShort and Inovalon Holdings

-0.98

Correlation Coefficient

ProShares UltraShort  Inovalon Holdings

Pay attention - limited upside

The 3 months correlation between ProShares and Inovalon is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort MSCI and Inovalon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovalon Holdings and ProShares UltraShort 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 UltraShort MSCI are associated (or correlated) with Inovalon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovalon Holdings has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Inovalon Holdings go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Inovalon Holdings

Considering the 90-day investment horizon ProShares UltraShort MSCI is expected to under-perform the Inovalon Holdings. In addition to that, ProShares UltraShort is 3.86 times more volatile than Inovalon Holdings. It trades about -0.05 of its total potential returns per unit of risk. Inovalon Holdings is currently generating about 0.21 per unit of volatility. If you would invest  2,510  in Inovalon Holdings on January 31, 2024 and sell it today you would earn a total of  275.00  from holding Inovalon Holdings or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	66.49%
Values	Daily Returns

ProShares UltraShort MSCI  vs.  Inovalon Holdings

ProShares UltraShort MSCI

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Etf's technical and fundamental 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.

Inovalon Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inovalon Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Inovalon Holdings is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares UltraShort and Inovalon Holdings

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

The idea behind ProShares UltraShort MSCI and Inovalon Holdings 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.