Correlation Between Visa and VN Index
Can any of the company-specific risk be diversified away by investing in both Visa and VN Index 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 VN Index 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 VN Index, you can compare the effects of market volatilities on Visa and VN Index 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 VN Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and VN Index.
Diversification Opportunities for Visa and VN Index
Excellent diversification
The 3 months correlation between Visa and VNI is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and VN Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VN Index 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 VN Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VN Index has no effect on the direction of Visa i.e., Visa and VN Index go up and down completely randomly.
Pair Corralation between Visa and VN Index
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.46 times more return on investment than VN Index. However, Visa is 4.46 times more volatile than VN Index. It trades about 0.07 of its potential returns per unit of risk. VN Index is currently generating about -0.4 per unit of risk. If you would invest 31,101 in Visa Class A on October 7, 2024 and sell it today you would earn a total of 390.00 from holding Visa Class A or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 35.0% |
| Values | Daily Returns |
Visa Class A vs. VN Index
Performance |
| Timeline |
Visa and VN Index Volatility Contrast
Predicted Return Density |
| Returns |
Visa Class A
Pair trading matchups for Visa
VN Index
Pair trading matchups for VN Index
Pair Trading with Visa and VN Index
The main advantage of trading using opposite Visa and VN Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, VN Index 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 VN Index will offset losses from the drop in VN Index's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| VN Index vs. Elcom Technology Communications | VN Index vs. SMC Investment Trading | VN Index vs. Camau Trading JSC | VN Index vs. Vietnam Airlines JSC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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