Correlation Between Visa and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR SP 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 SP 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 SP Global, you can compare the effects of market volatilities on Visa and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR SP.
Diversification Opportunities for Visa and SPDR SP
Weak diversification
The 3 months correlation between Visa and SPDR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Visa i.e., Visa and SPDR SP go up and down completely randomly.
Pair Corralation between Visa and SPDR SP
Taking into account the 90-day investment horizon Visa is expected to generate 2.91 times less return on investment than SPDR SP. In addition to that, Visa is 1.06 times more volatile than SPDR SP Global. It trades about 0.05 of its total potential returns per unit of risk. SPDR SP Global is currently generating about 0.16 per unit of volatility. If you would invest 1,893 in SPDR SP Global on October 24, 2024 and sell it today you would earn a total of 47.00 from holding SPDR SP Global or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Visa Class A vs. SPDR SP Global
Performance |
| Timeline |
| Visa Class A |
| SPDR SP Global |
Visa and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR SP
The main advantage of trading using opposite Visa and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| SPDR SP vs. SPDR MSCI World | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR SP 500 | SPDR SP vs. SPDR BB SB |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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