Correlation Between Visa and Capital World
Can any of the company-specific risk be diversified away by investing in both Visa and Capital 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 Capital 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 Capital World Growth, you can compare the effects of market volatilities on Visa and Capital 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Capital World.
Diversification Opportunities for Visa and Capital World
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Capital is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Visa i.e., Visa and Capital World go up and down completely randomly.
Pair Corralation between Visa and Capital World
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.55 times more return on investment than Capital World. However, Visa is 1.55 times more volatile than Capital World Growth. It trades about 0.11 of its potential returns per unit of risk. Capital World Growth is currently generating about 0.07 per unit of risk. If you would invest 26,932 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 4,576 from holding Visa Class A or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Visa Class A vs. Capital World Growth
Performance |
| Timeline |
| Visa Class A |
| Capital World Growth |
Visa and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Capital World
The main advantage of trading using opposite Visa and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Capital 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 Capital World will offset losses from the drop in Capital World's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Capital World vs. Falcon Focus Scv | Capital World vs. Volumetric Fund Volumetric | Capital World vs. Iaadx | Capital World vs. Western Asset Municipal |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |