Correlation Between Visa and State Street
Can any of the company-specific risk be diversified away by investing in both Visa and State Street 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 State Street 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 State Street Institutional, you can compare the effects of market volatilities on Visa and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and State Street.
Diversification Opportunities for Visa and State Street
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and State is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and State Street Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Institu 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Institu has no effect on the direction of Visa i.e., Visa and State Street go up and down completely randomly.
Pair Corralation between Visa and State Street
Taking into account the 90-day investment horizon Visa is expected to generate 1.11 times less return on investment than State Street. But when comparing it to its historical volatility, Visa Class A is 1.22 times less risky than State Street. It trades about 0.35 of its potential returns per unit of risk. State Street Institutional is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,859 in State Street Institutional on September 1, 2024 and sell it today you would earn a total of 192.00 from holding State Street Institutional or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. State Street Institutional
Performance |
| Timeline |
| Visa Class A |
| State Street Institu |
Visa and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and State Street
The main advantage of trading using opposite Visa and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| State Street vs. State Street Core | State Street vs. State Street Income | State Street vs. State Street Institutional | State Street vs. Aquagold International |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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