Correlation Between Visa and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR MSCI 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 SPDR MSCI 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 SPDR MSCI World, you can compare the effects of market volatilities on Visa and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR MSCI.
Diversification Opportunities for Visa and SPDR MSCI
Poor diversification
The 3 months correlation between Visa and SPDR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI World has no effect on the direction of Visa i.e., Visa and SPDR MSCI go up and down completely randomly.
Pair Corralation between Visa and SPDR MSCI
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.9 times more return on investment than SPDR MSCI. However, Visa Class A is 1.11 times less risky than SPDR MSCI. It trades about 0.36 of its potential returns per unit of risk. SPDR MSCI World is currently generating about 0.14 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,954 from holding Visa Class A or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. SPDR MSCI World
Performance |
| Timeline |
| Visa Class A |
| SPDR MSCI World |
Visa and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR MSCI
The main advantage of trading using opposite Visa and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| SPDR MSCI vs. SPDR Dow Jones | SPDR MSCI vs. iShares SP 500 | SPDR MSCI vs. iShares China CNY | SPDR MSCI vs. iShares Core MSCI |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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