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 Gold, 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
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and ProShares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ProShares Ultra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Gold 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 Gold 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 Class A is expected to generate 0.44 times more return on investment than ProShares Ultra. However, Visa Class A is 2.28 times less risky than ProShares Ultra. It trades about 0.35 of its potential returns per unit of risk. ProShares Ultra Gold is currently generating about -0.11 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. ProShares Ultra Gold
Performance |
| Timeline |
| Visa Class A |
| ProShares Ultra Gold |
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. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ProShares Ultra vs. MicroSectors Gold 3X | ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily FTSE | ProShares Ultra vs. UBS ETRACS |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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