Correlation Between Visa and Invesco Select
Can any of the company-specific risk be diversified away by investing in both Visa and Invesco Select 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 Invesco Select 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 Invesco Select Risk, you can compare the effects of market volatilities on Visa and Invesco Select 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 Invesco Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Invesco Select.
Diversification Opportunities for Visa and Invesco Select
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Invesco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Invesco Select Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Select Risk 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 Invesco Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Select Risk has no effect on the direction of Visa i.e., Visa and Invesco Select go up and down completely randomly.
Pair Corralation between Visa and Invesco Select
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.13 times more return on investment than Invesco Select. However, Visa is 3.13 times more volatile than Invesco Select Risk. It trades about 0.28 of its potential returns per unit of risk. Invesco Select Risk is currently generating about 0.2 per unit of risk. If you would invest 33,398 in Visa Class A on November 28, 2024 and sell it today you would earn a total of 1,665 from holding Visa Class A or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Invesco Select Risk
Performance |
| Timeline |
| Visa Class A |
| Invesco Select Risk |
Visa and Invesco Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Invesco Select
The main advantage of trading using opposite Visa and Invesco Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Invesco Select 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 Invesco Select will offset losses from the drop in Invesco Select's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Invesco Select vs. Us Government Securities | Invesco Select vs. Intermediate Term Tax Free Bond | Invesco Select vs. Ab Municipal Bond | Invesco Select vs. Vanguard Intermediate Term Government |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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