Correlation Between Visa and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Visa and IShares Canadian 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 IShares Canadian 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 iShares Canadian Universe, you can compare the effects of market volatilities on Visa and IShares Canadian 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Canadian.
Diversification Opportunities for Visa and IShares Canadian
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Canadian Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Universe 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Universe has no effect on the direction of Visa i.e., Visa and IShares Canadian go up and down completely randomly.
Pair Corralation between Visa and IShares Canadian
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.26 times more return on investment than IShares Canadian. However, Visa is 2.26 times more volatile than iShares Canadian Universe. It trades about 0.07 of its potential returns per unit of risk. iShares Canadian Universe is currently generating about 0.03 per unit of risk. If you would invest 22,734 in Visa Class A on October 23, 2024 and sell it today you would earn a total of 9,228 from holding Visa Class A or generate 40.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. iShares Canadian Universe
Performance |
| Timeline |
| Visa Class A |
| iShares Canadian Universe |
Visa and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and IShares Canadian
The main advantage of trading using opposite Visa and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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