Correlation Between Visa and Strategic Bond
Can any of the company-specific risk be diversified away by investing in both Visa and Strategic Bond 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 Strategic Bond 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 Strategic Bond Fund, you can compare the effects of market volatilities on Visa and Strategic Bond 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 Strategic Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Strategic Bond.
Diversification Opportunities for Visa and Strategic Bond
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Strategic is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Strategic Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Bond 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 Strategic Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Bond has no effect on the direction of Visa i.e., Visa and Strategic Bond go up and down completely randomly.
Pair Corralation between Visa and Strategic Bond
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.39 times more return on investment than Strategic Bond. However, Visa is 3.39 times more volatile than Strategic Bond Fund. It trades about 0.35 of its potential returns per unit of risk. Strategic Bond Fund is currently generating about 0.14 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. Strategic Bond Fund
Performance |
| Timeline |
| Visa Class A |
| Strategic Bond |
Visa and Strategic Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Strategic Bond
The main advantage of trading using opposite Visa and Strategic Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Strategic Bond 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 Strategic Bond will offset losses from the drop in Strategic Bond's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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