Correlation Between Visa and BetaPro Natural

Can any of the company-specific risk be diversified away by investing in both Visa and BetaPro Natural 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 BetaPro Natural 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 BetaPro Natural Gas, you can compare the effects of market volatilities on Visa and BetaPro Natural 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 BetaPro Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BetaPro Natural.

Diversification Opportunities for Visa and BetaPro Natural

0.42

Correlation Coefficient

Visa  BetaPro Natural

Very weak diversification

The 3 months correlation between Visa and BetaPro is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BetaPro Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Natural Gas 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 BetaPro Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Natural Gas has no effect on the direction of Visa i.e., Visa and BetaPro Natural go up and down completely randomly.

Pair Corralation between Visa and BetaPro Natural

Taking into account the 90-day investment horizon Visa is expected to generate 150.49 times less return on investment than BetaPro Natural. But when comparing it to its historical volatility, Visa Class A is 169.66 times less risky than BetaPro Natural. It trades about 0.23 of its potential returns per unit of risk. BetaPro Natural Gas is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  216.00  in BetaPro Natural Gas on September 5, 2024 and sell it today you would earn a total of  2,314  from holding BetaPro Natural Gas or generate 1071.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Visa Class A  vs.  BetaPro Natural Gas

Visa Class A

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BetaPro Natural Gas

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Natural Gas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Natural displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and BetaPro Natural

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

The idea behind Visa Class A and BetaPro Natural Gas 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.