Correlation Between Visa and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Visa and VanEck ETF 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 VanEck ETF 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 VanEck ETF Trust, you can compare the effects of market volatilities on Visa and VanEck ETF 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 VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and VanEck ETF.
Diversification Opportunities for Visa and VanEck ETF
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and VanEck is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Visa i.e., Visa and VanEck ETF go up and down completely randomly.
Pair Corralation between Visa and VanEck ETF
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.63 times more return on investment than VanEck ETF. However, Visa is 1.63 times more volatile than VanEck ETF Trust. It trades about 0.34 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.3 per unit of risk. If you would invest 29,018 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 2,490 from holding Visa Class A or generate 8.58% 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. VanEck ETF Trust
Performance |
| Timeline |
| Visa Class A |
| VanEck ETF Trust |
Visa and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and VanEck ETF
The main advantage of trading using opposite Visa and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. BlackRock Carbon Transition | VanEck ETF vs. VanEck Morningstar Wide |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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