Correlation Between Visa and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Visa and SPDR Barclays 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 Barclays 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 Barclays Intermediate, you can compare the effects of market volatilities on Visa and SPDR Barclays 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 Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and SPDR Barclays.
Diversification Opportunities for Visa and SPDR Barclays
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and SPDR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm 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 Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of Visa i.e., Visa and SPDR Barclays go up and down completely randomly.
Pair Corralation between Visa and SPDR Barclays
Taking into account the 90-day investment horizon Visa Class A is expected to generate 3.58 times more return on investment than SPDR Barclays. However, Visa is 3.58 times more volatile than SPDR Barclays Intermediate. It trades about 0.06 of its potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about 0.03 per unit of risk. If you would invest 19,966 in Visa Class A on January 26, 2024 and sell it today you would earn a total of 7,536 from holding Visa Class A or generate 37.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Visa Class A vs. SPDR Barclays Intermediate
Performance |
| Timeline |
| Visa Class A |
| SPDR Barclays Interm |
Visa and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and SPDR Barclays
The main advantage of trading using opposite Visa and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, SPDR Barclays 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 Barclays will offset losses from the drop in SPDR Barclays' long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
| SPDR Barclays vs. iShares iBoxx High | SPDR Barclays vs. iShares 1 3 Year | SPDR Barclays vs. iShares TIPS Bond | SPDR Barclays vs. iShares 7 10 Year |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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