Correlation Between Visa and New World
Can any of the company-specific risk be diversified away by investing in both Visa and New World 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 New World 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 New World Fund, you can compare the effects of market volatilities on Visa and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and New World.
Diversification Opportunities for Visa and New World
Very good diversification
The 3 months correlation between Visa and New is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Fund 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Visa i.e., Visa and New World go up and down completely randomly.
Pair Corralation between Visa and New World
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.82 times more return on investment than New World. However, Visa is 1.82 times more volatile than New World Fund. It trades about 0.16 of its potential returns per unit of risk. New World Fund is currently generating about 0.02 per unit of risk. If you would invest 27,801 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 3,707 from holding Visa Class A or generate 13.33% 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. New World Fund
Performance |
| Timeline |
| Visa Class A |
| New World Fund |
Visa and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and New World
The main advantage of trading using opposite Visa and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| New World vs. Western Asset Inflation | New World vs. American Funds Inflation | New World vs. Ab Bond Inflation | New World vs. Blackrock Inflation Protected |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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