Correlation Between Visa and ETF Series
Can any of the company-specific risk be diversified away by investing in both Visa and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Visa and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ETF Series.
Diversification Opportunities for Visa and ETF Series
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and ETF is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Visa i.e., Visa and ETF Series go up and down completely randomly.
Pair Corralation between Visa and ETF Series
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.87 times more return on investment than ETF Series. However, Visa is 1.87 times more volatile than ETF Series Solutions. It trades about 0.11 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.14 per unit of risk. If you would invest 26,932 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Visa Class A vs. ETF Series Solutions
Performance |
| Timeline |
| Visa Class A |
| ETF Series Solutions |
Visa and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ETF Series
The main advantage of trading using opposite Visa and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| ETF Series vs. iShares Core SP | ETF Series vs. iShares Core MSCI | ETF Series vs. iShares Broad USD | ETF Series vs. iShares Core SP |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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