Correlation Between Visa and Vanguard Emerging
Can any of the company-specific risk be diversified away by investing in both Visa and Vanguard Emerging 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 Vanguard Emerging 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 Vanguard Emerging Markets, you can compare the effects of market volatilities on Visa and Vanguard Emerging 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 Vanguard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Vanguard Emerging.
Diversification Opportunities for Visa and Vanguard Emerging
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Vanguard is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Visa i.e., Visa and Vanguard Emerging go up and down completely randomly.
Pair Corralation between Visa and Vanguard Emerging
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.56 times more return on investment than Vanguard Emerging. However, Visa is 1.56 times more volatile than Vanguard Emerging Markets. It trades about 0.4 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.2 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Vanguard Emerging Markets
Performance |
| Timeline |
| Visa Class A |
| Vanguard Emerging Markets |
Visa and Vanguard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Vanguard Emerging
The main advantage of trading using opposite Visa and Vanguard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Vanguard Emerging 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 Vanguard Emerging will offset losses from the drop in Vanguard Emerging's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Vanguard Emerging vs. Vanguard Developed Markets | Vanguard Emerging vs. Vanguard Reit Index | Vanguard Emerging vs. Vanguard Small Cap Index | Vanguard Emerging vs. Vanguard European Stock |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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