Correlation Between Visa and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Trust 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 Trust 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 Trust, you can compare the effects of market volatilities on Visa and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Trust.
Diversification Opportunities for Visa and IShares Trust
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and IShares is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Visa i.e., Visa and IShares Trust go up and down completely randomly.
Pair Corralation between Visa and IShares Trust
Taking into account the 90-day investment horizon Visa is expected to generate 733.47 times less return on investment than IShares Trust. But when comparing it to its historical volatility, Visa Class A is 251.07 times less risky than IShares Trust. It trades about 0.09 of its potential returns per unit of risk. iShares Trust is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 0.00 in iShares Trust on August 29, 2024 and sell it today you would earn a total of 2,501 from holding iShares Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 3.02% |
| Values | Daily Returns |
Visa Class A vs. iShares Trust
Performance |
| Timeline |
| Visa Class A |
| iShares Trust |
Visa and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Trust
The main advantage of trading using opposite Visa and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| IShares Trust vs. VanEck Vectors Moodys | IShares Trust vs. BondBloxx ETF Trust | IShares Trust vs. Vanguard ESG Corporate | IShares Trust vs. Vanguard Intermediate Term Corporate |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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