Correlation Between Visa and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Visa and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR Portfolio.
Diversification Opportunities for Visa and SPDR Portfolio
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and SPDR is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Visa i.e., Visa and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Visa and SPDR Portfolio
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.75 times more return on investment than SPDR Portfolio. However, Visa is 1.75 times more volatile than SPDR Portfolio SP. It trades about 0.33 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.21 per unit of risk. If you would invest 28,365 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 2,627 from holding Visa Class A or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SPDR Portfolio SP
Performance |
| Timeline |
| Visa Class A |
| SPDR Portfolio SP |
Visa and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR Portfolio
The main advantage of trading using opposite Visa and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR SP 600 | SPDR Portfolio vs. SPDR SP World |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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