Correlation Between Visa and IShares Broad
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Broad 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 Broad 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 Broad USD, you can compare the effects of market volatilities on Visa and IShares Broad 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 Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Broad.
Diversification Opportunities for Visa and IShares Broad
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and IShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Broad USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Broad USD 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 Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Broad USD has no effect on the direction of Visa i.e., Visa and IShares Broad go up and down completely randomly.
Pair Corralation between Visa and IShares Broad
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.59 times more return on investment than IShares Broad. However, Visa is 3.59 times more volatile than iShares Broad USD. It trades about 0.33 of its potential returns per unit of risk. iShares Broad USD is currently generating about -0.04 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. iShares Broad USD
Performance |
| Timeline |
| Visa Class A |
| iShares Broad USD |
Visa and IShares Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Broad
The main advantage of trading using opposite Visa and IShares Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Broad 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 Broad will offset losses from the drop in IShares Broad's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| IShares Broad vs. iShares 5 10 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. iShares 1 5 Year | IShares Broad vs. iShares 0 5 Year |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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