Correlation Between Visa and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Visa and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on Visa and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and FT Cboe.
Diversification Opportunities for Visa and FT Cboe
Poor diversification
The 3 months correlation between Visa and SNOV is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Visa i.e., Visa and FT Cboe go up and down completely randomly.
Pair Corralation between Visa and FT Cboe
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.02 times more return on investment than FT Cboe. However, Visa is 2.02 times more volatile than FT Cboe Vest. It trades about 0.07 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.14 per unit of risk. If you would invest 22,590 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 8,402 from holding Visa Class A or generate 37.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 56.26% |
| Values | Daily Returns |
Visa Class A vs. FT Cboe Vest
Performance |
| Timeline |
| Visa Class A |
| FT Cboe Vest |
Visa and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and FT Cboe
The main advantage of trading using opposite Visa and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| FT Cboe vs. Dimensional ETF Trust | FT Cboe vs. Vanguard Small Cap Index | FT Cboe vs. First Trust Multi Manager | FT Cboe vs. Vanguard SP Small Cap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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