Correlation Between Visa and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR SSgA 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 SSgA 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 SSgA Ultra, you can compare the effects of market volatilities on Visa and SPDR SSgA 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 SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR SSgA.
Diversification Opportunities for Visa and SPDR SSgA
Poor diversification
The 3 months correlation between Visa and SPDR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR SSgA Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Ultra 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 SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Ultra has no effect on the direction of Visa i.e., Visa and SPDR SSgA go up and down completely randomly.
Pair Corralation between Visa and SPDR SSgA
Taking into account the 90-day investment horizon Visa Class A is expected to generate 28.13 times more return on investment than SPDR SSgA. However, Visa is 28.13 times more volatile than SPDR SSgA Ultra. It trades about 0.37 of its potential returns per unit of risk. SPDR SSgA Ultra is currently generating about 0.4 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. SPDR SSgA Ultra
Performance |
| Timeline |
| Visa Class A |
| SPDR SSgA Ultra |
Visa and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR SSgA
The main advantage of trading using opposite Visa and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR SSgA 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 SSgA will offset losses from the drop in SPDR SSgA's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SPDR SSgA vs. SPDR Bloomberg Investment | SPDR SSgA vs. SPDR Bloomberg 1 10 | SPDR SSgA vs. iShares Short Maturity | SPDR SSgA vs. Invesco Ultra Short |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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