Correlation Between Visa and SPDR ICE
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR ICE 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 SPDR ICE 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 SPDR ICE Preferred, you can compare the effects of market volatilities on Visa and SPDR ICE 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 SPDR ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR ICE.
Diversification Opportunities for Visa and SPDR ICE
Very good diversification
The 3 months correlation between Visa and SPDR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR ICE Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR ICE Preferred 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 SPDR ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR ICE Preferred has no effect on the direction of Visa i.e., Visa and SPDR ICE go up and down completely randomly.
Pair Corralation between Visa and SPDR ICE
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.68 times more return on investment than SPDR ICE. However, Visa is 1.68 times more volatile than SPDR ICE Preferred. It trades about 0.1 of its potential returns per unit of risk. SPDR ICE Preferred is currently generating about 0.06 per unit of risk. If you would invest 22,355 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 9,153 from holding Visa Class A or generate 40.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SPDR ICE Preferred
Performance |
| Timeline |
| Visa Class A |
| SPDR ICE Preferred |
Visa and SPDR ICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR ICE
The main advantage of trading using opposite Visa and SPDR ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR ICE 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 SPDR ICE will offset losses from the drop in SPDR ICE's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |