Correlation Between Fidelity Metaverse and ProShares Metaverse

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

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

Diversification Opportunities for Fidelity Metaverse and ProShares Metaverse

0.85

Correlation Coefficient

Fidelity Metaverse  ProShares Metaverse

Very poor diversification

The 3 months correlation between Fidelity and ProShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Metaverse ETF and ProShares Metaverse ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Metaverse ETF and Fidelity Metaverse 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 Fidelity Metaverse ETF are associated (or correlated) with ProShares Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Metaverse ETF has no effect on the direction of Fidelity Metaverse i.e., Fidelity Metaverse and ProShares Metaverse go up and down completely randomly.

Pair Corralation between Fidelity Metaverse and ProShares Metaverse

Given the investment horizon of 90 days Fidelity Metaverse ETF is expected to generate 0.63 times more return on investment than ProShares Metaverse. However, Fidelity Metaverse ETF is 1.6 times less risky than ProShares Metaverse. It trades about -0.04 of its potential returns per unit of risk. ProShares Metaverse ETF is currently generating about -0.04 per unit of risk. If you would invest  3,017  in Fidelity Metaverse ETF on December 27, 2024 and sell it today you would lose (138.00) from holding Fidelity Metaverse ETF or give up 4.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Metaverse ETF  vs.  ProShares Metaverse ETF

Fidelity Metaverse ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Metaverse ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Fidelity Metaverse is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Metaverse ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Metaverse ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ProShares Metaverse is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fidelity Metaverse and ProShares Metaverse

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

The idea behind Fidelity Metaverse ETF and ProShares Metaverse ETF 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.