Correlation Between Visa and Western Asset
Can any of the company-specific risk be diversified away by investing in both Visa and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Visa and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Western Asset.
Diversification Opportunities for Visa and Western Asset
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Western is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Visa i.e., Visa and Western Asset go up and down completely randomly.
Pair Corralation between Visa and Western Asset
Taking into account the 90-day investment horizon Visa Class A is expected to generate 4.66 times more return on investment than Western Asset. However, Visa is 4.66 times more volatile than Western Asset Inflation. It trades about 0.19 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.1 per unit of risk. If you would invest 26,867 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 4,452 from holding Visa Class A or generate 16.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Visa Class A vs. Western Asset Inflation
Performance |
| Timeline |
| Visa Class A |
| Western Asset Inflation |
Visa and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Western Asset
The main advantage of trading using opposite Visa and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Western Asset vs. Pgim Conservative Retirement | Western Asset vs. Pro Blend Moderate Term | Western Asset vs. Blackrock Moderate Prepared | Western Asset vs. Fidelity Managed Retirement |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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