Correlation Between Visa and Commodity Return
Can any of the company-specific risk be diversified away by investing in both Visa and Commodity Return 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 Commodity Return 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 Commodity Return Strategy, you can compare the effects of market volatilities on Visa and Commodity Return 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 Commodity Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Commodity Return.
Diversification Opportunities for Visa and Commodity Return
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Commodity is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Commodity Return Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodity Return Strategy 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 Commodity Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodity Return Strategy has no effect on the direction of Visa i.e., Visa and Commodity Return go up and down completely randomly.
Pair Corralation between Visa and Commodity Return
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.63 times more return on investment than Commodity Return. However, Visa is 1.63 times more volatile than Commodity Return Strategy. It trades about 0.35 of its potential returns per unit of risk. Commodity Return Strategy is currently generating about 0.01 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Commodity Return Strategy
Performance |
| Timeline |
| Visa Class A |
| Commodity Return Strategy |
Visa and Commodity Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Commodity Return
The main advantage of trading using opposite Visa and Commodity Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Commodity Return 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 Commodity Return will offset losses from the drop in Commodity Return's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Commodity Return vs. Credit Suisse Floating | Commodity Return vs. Credit Suisse Floating | Commodity Return vs. Credit Suisse Modity | Commodity Return vs. Credit Suisse Modity |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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