Correlation Between Visa and Real Assets
Can any of the company-specific risk be diversified away by investing in both Visa and Real Assets 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 Real Assets 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 Real Assets Portfolio, you can compare the effects of market volatilities on Visa and Real Assets 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 Real Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Real Assets.
Diversification Opportunities for Visa and Real Assets
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and REAL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Real Assets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Assets Portfolio 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 Real Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Assets Portfolio has no effect on the direction of Visa i.e., Visa and Real Assets go up and down completely randomly.
Pair Corralation between Visa and Real Assets
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.13 times more return on investment than Real Assets. However, Visa is 2.13 times more volatile than Real Assets Portfolio. It trades about 0.35 of its potential returns per unit of risk. Real Assets Portfolio is currently generating about -0.03 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Real Assets Portfolio
Performance |
| Timeline |
| Visa Class A |
| Real Assets Portfolio |
Visa and Real Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Real Assets
The main advantage of trading using opposite Visa and Real Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Real Assets 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 Real Assets will offset losses from the drop in Real Assets' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Real Assets vs. Emerging Markets Equity | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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