Correlation Between BlackRock ESG and Visa

Can any of the company-specific risk be diversified away by investing in both BlackRock ESG and Visa 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 BlackRock ESG and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock ESG Capital and Visa Class A, you can compare the effects of market volatilities on BlackRock ESG and Visa 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 BlackRock ESG with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock ESG and Visa.

Diversification Opportunities for BlackRock ESG and Visa

0.56

Correlation Coefficient

BlackRock ESG  Visa

Very weak diversification

The 3 months correlation between BlackRock and Visa is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and BlackRock ESG 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 BlackRock ESG Capital are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of BlackRock ESG i.e., BlackRock ESG and Visa go up and down completely randomly.

Pair Corralation between BlackRock ESG and Visa

Given the investment horizon of 90 days BlackRock ESG Capital is expected to generate 1.33 times more return on investment than Visa. However, BlackRock ESG is 1.33 times more volatile than Visa Class A. It trades about -0.06 of its potential returns per unit of risk. Visa Class A is currently generating about -0.17 per unit of risk. If you would invest  1,687  in BlackRock ESG Capital on February 6, 2024 and sell it today you would lose (22.00) from holding BlackRock ESG Capital or give up 1.3% of portfolio value over 90 days.

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

BlackRock ESG Capital  vs.  Visa Class A

BlackRock ESG Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with BlackRock ESG and Visa

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

The idea behind BlackRock ESG Capital and Visa Class A 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.