Correlation Between Visa and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both Visa and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2025, you can compare the effects of market volatilities on Visa and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Invesco BulletShares.

Diversification Opportunities for Visa and Invesco BulletShares

-0.41

Correlation Coefficient

Visa  Invesco BulletShares

Very good diversification

The 3 months correlation between Visa and Invesco is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Invesco BulletShares 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2025 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2025 has no effect on the direction of Visa i.e., Visa and Invesco BulletShares go up and down completely randomly.

Pair Corralation between Visa and Invesco BulletShares

Taking into account the 90-day investment horizon Visa Class A is expected to generate 12.12 times more return on investment than Invesco BulletShares. However, Visa is 12.12 times more volatile than Invesco BulletShares 2025. It trades about 0.04 of its potential returns per unit of risk. Invesco BulletShares 2025 is currently generating about 0.23 per unit of risk. If you would invest  27,464  in Visa Class A on February 20, 2024 and sell it today you would earn a total of  546.00  from holding Visa Class A or generate 1.99% return on investment over 90 days.

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

Visa Class A  vs.  Invesco BulletShares 2025

Visa Class A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Invesco BulletShares 2025

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2025 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Invesco BulletShares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Visa and Invesco BulletShares

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

The idea behind Visa Class A and Invesco BulletShares 2025 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.