Correlation Between Visa and IShares Medical
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Medical 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 IShares Medical 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 iShares Medical Devices, you can compare the effects of market volatilities on Visa and IShares Medical 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 IShares Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Medical.
Diversification Opportunities for Visa and IShares Medical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Medical Devices 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 IShares Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Medical Devices has no effect on the direction of Visa i.e., Visa and IShares Medical go up and down completely randomly.
Pair Corralation between Visa and IShares Medical
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.66 times more return on investment than IShares Medical. However, Visa is 1.66 times more volatile than iShares Medical Devices. It trades about 0.17 of its potential returns per unit of risk. iShares Medical Devices is currently generating about 0.08 per unit of risk. If you would invest 27,379 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 3,803 from holding Visa Class A or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. iShares Medical Devices
Performance |
| Timeline |
| Visa Class A |
| iShares Medical Devices |
Visa and IShares Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Medical
The main advantage of trading using opposite Visa and IShares Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Medical 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 IShares Medical will offset losses from the drop in IShares Medical's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| IShares Medical vs. iShares Healthcare Providers | IShares Medical vs. iShares Expanded Tech Software | IShares Medical vs. iShares Aerospace Defense | IShares Medical vs. iShares Pharmaceuticals ETF |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |