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 Corp, 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
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and State is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 Corp 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 Class A is expected to generate 0.61 times more return on investment than State Street. However, Visa Class A is 1.65 times less risky than State Street. It trades about 0.09 of its potential returns per unit of risk. State Street Corp is currently generating about 0.05 per unit of risk. If you would invest 20,586 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 10,406 from holding Visa Class A or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. State Street Corp
Performance |
| Timeline |
| Visa Class A |
| State Street Corp |
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. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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