Correlation Between Visa and Global Net
Can any of the company-specific risk be diversified away by investing in both Visa and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Visa and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Global Net.
Diversification Opportunities for Visa and Global Net
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Global is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Visa i.e., Visa and Global Net go up and down completely randomly.
Pair Corralation between Visa and Global Net
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.67 times more return on investment than Global Net. However, Visa Class A is 1.5 times less risky than Global Net. It trades about 0.09 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.06 per unit of risk. If you would invest 22,415 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 8,577 from holding Visa Class A or generate 38.26% 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. Global Net Lease
Performance |
| Timeline |
| Visa Class A |
| Global Net Lease |
Visa and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Global Net
The main advantage of trading using opposite Visa and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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