Correlation Between Visa and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Visa and ProShares Ultra 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 Ultra 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 Ultra SmallCap600, you can compare the effects of market volatilities on Visa and ProShares Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ProShares Ultra.
Diversification Opportunities for Visa and ProShares Ultra
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and ProShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ProShares Ultra SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Smal 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Smal has no effect on the direction of Visa i.e., Visa and ProShares Ultra go up and down completely randomly.
Pair Corralation between Visa and ProShares Ultra
Taking into account the 90-day investment horizon Visa is expected to generate 1.73 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Visa Class A is 2.65 times less risky than ProShares Ultra. It trades about 0.34 of its potential returns per unit of risk. ProShares Ultra SmallCap600 is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,667 in ProShares Ultra SmallCap600 on August 29, 2024 and sell it today you would earn a total of 445.00 from holding ProShares Ultra SmallCap600 or generate 16.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. ProShares Ultra SmallCap600
Performance |
| Timeline |
| Visa Class A |
| ProShares Ultra Smal |
Visa and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ProShares Ultra
The main advantage of trading using opposite Visa and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| ProShares Ultra vs. ProShares Ultra MidCap400 | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra Consumer |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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