Correlation Between Visa and US Treasury
Can any of the company-specific risk be diversified away by investing in both Visa and US Treasury 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 Treasury 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 Treasury 3, you can compare the effects of market volatilities on Visa and US Treasury 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 Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and US Treasury.
Diversification Opportunities for Visa and US Treasury
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and UTRE is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and US Treasury 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 3 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 Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 3 has no effect on the direction of Visa i.e., Visa and US Treasury go up and down completely randomly.
Pair Corralation between Visa and US Treasury
Taking into account the 90-day investment horizon Visa Class A is expected to generate 5.94 times more return on investment than US Treasury. However, Visa is 5.94 times more volatile than US Treasury 3. It trades about 0.09 of its potential returns per unit of risk. US Treasury 3 is currently generating about 0.09 per unit of risk. If you would invest 25,387 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 6,121 from holding Visa Class A or generate 24.11% 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 Treasury 3
Performance |
| Timeline |
| Visa Class A |
| US Treasury 3 |
Visa and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and US Treasury
The main advantage of trading using opposite Visa and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, US Treasury 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 Treasury will offset losses from the drop in US Treasury's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| US Treasury vs. US Treasury 5 | US Treasury vs. US Treasury 30 | US Treasury vs. US Treasury 7 | US Treasury vs. US Treasury 20 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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