Correlation Between Visa and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Visa and Emerging Markets 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 Emerging Markets 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 Emerging Markets Fund, you can compare the effects of market volatilities on Visa and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Emerging Markets.
Diversification Opportunities for Visa and Emerging Markets
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Emerging is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Visa i.e., Visa and Emerging Markets go up and down completely randomly.
Pair Corralation between Visa and Emerging Markets
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.14 times more return on investment than Emerging Markets. However, Visa is 1.14 times more volatile than Emerging Markets Fund. It trades about 0.08 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about 0.02 per unit of risk. If you would invest 22,626 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 8,882 from holding Visa Class A or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Visa Class A vs. Emerging Markets Fund
Performance |
| Timeline |
| Visa Class A |
| Emerging Markets |
Visa and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Emerging Markets
The main advantage of trading using opposite Visa and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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