Correlation Between Visa and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both Visa and FIRST TRUST 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 FIRST TRUST 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 FIRST TRUST GLOBAL, you can compare the effects of market volatilities on Visa and FIRST TRUST 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 FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FIRST TRUST.
Diversification Opportunities for Visa and FIRST TRUST
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and FIRST is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL 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 FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST GLOBAL has no effect on the direction of Visa i.e., Visa and FIRST TRUST go up and down completely randomly.
Pair Corralation between Visa and FIRST TRUST
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.64 times more return on investment than FIRST TRUST. However, Visa is 1.64 times more volatile than FIRST TRUST GLOBAL. It trades about 0.09 of its potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about 0.08 per unit of risk. If you would invest 20,456 in Visa Class A on September 20, 2024 and sell it today you would earn a total of 11,123 from holding Visa Class A or generate 54.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Visa Class A vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| Visa Class A |
| FIRST TRUST GLOBAL |
Visa and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FIRST TRUST
The main advantage of trading using opposite Visa and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST's long position.The idea behind Visa Class A and FIRST TRUST GLOBAL 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.| FIRST TRUST vs. GraniteShares 3x Short | FIRST TRUST vs. WisdomTree Natural Gas | FIRST TRUST vs. Leverage Shares 3x | FIRST TRUST vs. WisdomTree Natural Gas |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |