Correlation Between Visa and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Visa and Foreign Bond 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 Foreign Bond 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 Foreign Bond Fund, you can compare the effects of market volatilities on Visa and Foreign Bond 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 Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Foreign Bond.
Diversification Opportunities for Visa and Foreign Bond
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Foreign is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond 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 Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Visa i.e., Visa and Foreign Bond go up and down completely randomly.
Pair Corralation between Visa and Foreign Bond
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.98 times more return on investment than Foreign Bond. However, Visa is 1.98 times more volatile than Foreign Bond Fund. It trades about -0.14 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about -0.28 per unit of risk. If you would invest 28,060 in Visa Class A on January 26, 2024 and sell it today you would lose (558.00) from holding Visa Class A or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Foreign Bond Fund
Performance |
| Timeline |
| Visa Class A |
| Foreign Bond |
Visa and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Foreign Bond
The main advantage of trading using opposite Visa and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.The idea behind Visa Class A and Foreign Bond Fund 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.| Foreign Bond vs. Advent Claymore Convertible | Foreign Bond vs. Absolute Convertible Arbitrage | Foreign Bond vs. Lord Abbett Vertible | Foreign Bond vs. Columbia Vertible Securities |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |