Correlation Between Visa and Wheat Futures
Can any of the company-specific risk be diversified away by investing in both Visa and Wheat Futures 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 Wheat Futures 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 Wheat Futures, you can compare the effects of market volatilities on Visa and Wheat Futures 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 Wheat Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Wheat Futures.
Diversification Opportunities for Visa and Wheat Futures
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Wheat is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Wheat Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheat Futures 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 Wheat Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheat Futures has no effect on the direction of Visa i.e., Visa and Wheat Futures go up and down completely randomly.
Pair Corralation between Visa and Wheat Futures
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.55 times more return on investment than Wheat Futures. However, Visa Class A is 1.8 times less risky than Wheat Futures. It trades about 0.09 of its potential returns per unit of risk. Wheat Futures is currently generating about -0.04 per unit of risk. If you would invest 20,588 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 10,594 from holding Visa Class A or generate 51.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.61% |
| Values | Daily Returns |
Visa Class A vs. Wheat Futures
Performance |
| Timeline |
| Visa Class A |
| Wheat Futures |
Visa and Wheat Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Wheat Futures
The main advantage of trading using opposite Visa and Wheat Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Wheat Futures 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 Wheat Futures will offset losses from the drop in Wheat Futures' long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Wheat Futures vs. Nasdaq 100 | Wheat Futures vs. Oat Futures | Wheat Futures vs. Feeder Cattle Futures | Wheat Futures vs. Micro Silver Futures |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |