Correlation Between Visa and IShares Aaa

Can any of the company-specific risk be diversified away by investing in both Visa and IShares Aaa 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 Aaa 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 Aaa , you can compare the effects of market volatilities on Visa and IShares Aaa 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 Aaa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and IShares Aaa.

Diversification Opportunities for Visa and IShares Aaa

0.35

Correlation Coefficient

Visa  IShares Aaa

Weak diversification

The 3 months correlation between Visa and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Aaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Aaa 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 Aaa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Aaa has no effect on the direction of Visa i.e., Visa and IShares Aaa go up and down completely randomly.

Pair Corralation between Visa and IShares Aaa

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.77 times more return on investment than IShares Aaa. However, Visa is 1.77 times more volatile than iShares Aaa . It trades about 0.15 of its potential returns per unit of risk. iShares Aaa is currently generating about 0.1 per unit of risk. If you would invest  23,763  in Visa Class A on January 30, 2024 and sell it today you would earn a total of  3,689  from holding Visa Class A or generate 15.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  iShares Aaa

Visa Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Aaa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Aaa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Aaa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and IShares Aaa

The main advantage of trading using opposite Visa and IShares Aaa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, IShares Aaa 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 Aaa will offset losses from the drop in IShares Aaa's long position.

The idea behind Visa Class A and iShares Aaa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.