Correlation Between Visa and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and ProShares UltraShort Utilities, you can compare the effects of market volatilities on Visa 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 Visa with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ProShares UltraShort.
Diversification Opportunities for Visa and ProShares UltraShort
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and ProShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ProShares UltraShort Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Visa 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 Visa Class A 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 has no effect on the direction of Visa i.e., Visa and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Visa and ProShares UltraShort
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.31 times more return on investment than ProShares UltraShort. However, Visa Class A is 3.27 times less risky than ProShares UltraShort. It trades about -0.18 of its potential returns per unit of risk. ProShares UltraShort Utilities is currently generating about -0.13 per unit of risk. If you would invest 28,121 in Visa Class A on January 25, 2024 and sell it today you would lose (710.00) from holding Visa Class A or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. ProShares UltraShort Utilities
Performance |
| Timeline |
| Visa Class A |
| ProShares UltraShort |
Visa and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ProShares UltraShort
The main advantage of trading using opposite Visa and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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