Correlation Between Visa and Blackrock Inflation

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

Diversification Opportunities for Visa and Blackrock Inflation

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Visa and Blackrock is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Blackrock Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Inflation 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 Blackrock Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Inflation has no effect on the direction of Visa i.e., Visa and Blackrock Inflation go up and down completely randomly.

Pair Corralation between Visa and Blackrock Inflation

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.75 times more return on investment than Blackrock Inflation. However, Visa is 2.75 times more volatile than Blackrock Inflation Protected. It trades about 0.09 of its potential returns per unit of risk. Blackrock Inflation Protected is currently generating about 0.03 per unit of risk. If you would invest  20,460  in Visa Class A on August 28, 2024 and sell it today you would earn a total of  10,859  from holding Visa Class A or generate 53.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  Blackrock Inflation Protected

 Performance 
       Timeline  
Visa Class A 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.
Blackrock Inflation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Blackrock Inflation Protected has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Visa and Blackrock Inflation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Visa and Blackrock Inflation

The main advantage of trading using opposite Visa and Blackrock Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Blackrock Inflation 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 Blackrock Inflation will offset losses from the drop in Blackrock Inflation's long position.
The idea behind Visa Class A and Blackrock Inflation Protected 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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