Correlation Between Visa and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Russell 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 Russell 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 Russell 1000, you can compare the effects of market volatilities on Visa and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Russell.
Diversification Opportunities for Visa and IShares Russell
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 1000 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 1000 has no effect on the direction of Visa i.e., Visa and IShares Russell go up and down completely randomly.
Pair Corralation between Visa and IShares Russell
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.12 times more return on investment than IShares Russell. However, Visa is 1.12 times more volatile than iShares Russell 1000. It trades about 0.37 of its potential returns per unit of risk. iShares Russell 1000 is currently generating about 0.12 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% 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. iShares Russell 1000
Performance |
| Timeline |
| Visa Class A |
| iShares Russell 1000 |
Visa and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Russell
The main advantage of trading using opposite Visa and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| IShares Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 1000 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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