Correlation Between Visa and Bancroft Fund
Can any of the company-specific risk be diversified away by investing in both Visa and Bancroft Fund 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 Bancroft Fund 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 Bancroft Fund Limited, you can compare the effects of market volatilities on Visa and Bancroft Fund 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 Bancroft Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bancroft Fund.
Diversification Opportunities for Visa and Bancroft Fund
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Bancroft is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bancroft Fund Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancroft Fund Limited 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 Bancroft Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancroft Fund Limited has no effect on the direction of Visa i.e., Visa and Bancroft Fund go up and down completely randomly.
Pair Corralation between Visa and Bancroft Fund
Taking into account the 90-day investment horizon Visa is expected to generate 1.1 times less return on investment than Bancroft Fund. In addition to that, Visa is 1.49 times more volatile than Bancroft Fund Limited. It trades about 0.34 of its total potential returns per unit of risk. Bancroft Fund Limited is currently generating about 0.55 per unit of volatility. If you would invest 1,663 in Bancroft Fund Limited on August 29, 2024 and sell it today you would earn a total of 184.00 from holding Bancroft Fund Limited or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Bancroft Fund Limited
Performance |
| Timeline |
| Visa Class A |
| Bancroft Fund Limited |
Visa and Bancroft Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bancroft Fund
The main advantage of trading using opposite Visa and Bancroft Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bancroft Fund 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 Bancroft Fund will offset losses from the drop in Bancroft Fund's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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