Correlation Between Visa and Us Government
Can any of the company-specific risk be diversified away by investing in both Visa and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Visa and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Us Government.
Diversification Opportunities for Visa and Us Government
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and UGSCX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Visa i.e., Visa and Us Government go up and down completely randomly.
Pair Corralation between Visa and Us Government
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.04 times more return on investment than Us Government. However, Visa is 4.04 times more volatile than Us Government Securities. It trades about 0.37 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.01 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Us Government Securities
Performance |
| Timeline |
| Visa Class A |
| Us Government Securities |
Visa and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Us Government
The main advantage of trading using opposite Visa and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Us Government vs. Franklin Lifesmart Retirement | Us Government vs. Jp Morgan Smartretirement | Us Government vs. Qs Moderate Growth | Us Government vs. Moderately Aggressive Balanced |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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