Correlation Between Visa and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR Barclays 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 SPDR Barclays 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 SPDR Barclays Euro, you can compare the effects of market volatilities on Visa and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR Barclays.
Diversification Opportunities for Visa and SPDR Barclays
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and SPDR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR Barclays Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Euro 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Euro has no effect on the direction of Visa i.e., Visa and SPDR Barclays go up and down completely randomly.
Pair Corralation between Visa and SPDR Barclays
Taking into account the 90-day investment horizon Visa Class A is expected to generate 6.34 times more return on investment than SPDR Barclays. However, Visa is 6.34 times more volatile than SPDR Barclays Euro. It trades about 0.27 of its potential returns per unit of risk. SPDR Barclays Euro is currently generating about 0.1 per unit of risk. If you would invest 27,464 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 3,718 from holding Visa Class A or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SPDR Barclays Euro
Performance |
| Timeline |
| Visa Class A |
| SPDR Barclays Euro |
Visa and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR Barclays
The main advantage of trading using opposite Visa and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. WisdomTree Short GBP |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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