Correlation Between Visa and IShares Factors
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Factors 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 IShares Factors 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 iShares Factors Growth, you can compare the effects of market volatilities on Visa and IShares Factors 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 IShares Factors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Factors.
Diversification Opportunities for Visa and IShares Factors
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and IShares is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Factors Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Factors 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 IShares Factors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Factors Growth has no effect on the direction of Visa i.e., Visa and IShares Factors go up and down completely randomly.
Pair Corralation between Visa and IShares Factors
Taking into account the 90-day investment horizon Visa is expected to generate 1.25 times less return on investment than IShares Factors. But when comparing it to its historical volatility, Visa Class A is 1.04 times less risky than IShares Factors. It trades about 0.09 of its potential returns per unit of risk. iShares Factors Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,715 in iShares Factors Growth on September 3, 2024 and sell it today you would earn a total of 1,005 from holding iShares Factors Growth or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.55% |
| Values | Daily Returns |
Visa Class A vs. iShares Factors Growth
Performance |
| Timeline |
| Visa Class A |
| iShares Factors Growth |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Visa and IShares Factors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Factors
The main advantage of trading using opposite Visa and IShares Factors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Factors 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 IShares Factors will offset losses from the drop in IShares Factors' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| IShares Factors vs. iShares ESG Advanced | IShares Factors vs. iShares Focused Value | IShares Factors vs. iShares MSCI USA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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