Correlation Between Visa and Barings Active
Can any of the company-specific risk be diversified away by investing in both Visa and Barings Active 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 Barings Active 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 Barings Active Short, you can compare the effects of market volatilities on Visa and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Barings Active.
Diversification Opportunities for Visa and Barings Active
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Barings is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Barings Active Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Active Short 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 Barings Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Active Short has no effect on the direction of Visa i.e., Visa and Barings Active go up and down completely randomly.
Pair Corralation between Visa and Barings Active
Taking into account the 90-day investment horizon Visa Class A is expected to generate 8.39 times more return on investment than Barings Active. However, Visa is 8.39 times more volatile than Barings Active Short. It trades about 0.16 of its potential returns per unit of risk. Barings Active Short is currently generating about 0.21 per unit of risk. If you would invest 32,091 in Visa Class A on October 26, 2024 and sell it today you would earn a total of 918.00 from holding Visa Class A or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Visa Class A vs. Barings Active Short
Performance |
| Timeline |
| Visa Class A |
| Barings Active Short |
Visa and Barings Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Barings Active
The main advantage of trading using opposite Visa and Barings Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Barings Active 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 Barings Active will offset losses from the drop in Barings Active's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Barings Active vs. Barings Active Short | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Emerging Markets | Barings Active vs. Barings Global Floating |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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