Correlation Between Visa and Blackrock Taxable

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

Diversification Opportunities for Visa and Blackrock Taxable

0.37

Correlation Coefficient

Visa  Blackrock Taxable

Weak diversification

The 3 months correlation between Visa and Blackrock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Blackrock Taxable Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Taxable 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 Blackrock Taxable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Taxable has no effect on the direction of Visa i.e., Visa and Blackrock Taxable go up and down completely randomly.

Pair Corralation between Visa and Blackrock Taxable

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.93 times more return on investment than Blackrock Taxable. However, Visa Class A is 1.07 times less risky than Blackrock Taxable. It trades about 0.11 of its potential returns per unit of risk. Blackrock Taxable Municipal is currently generating about 0.03 per unit of risk. If you would invest  24,263  in Visa Class A on February 1, 2024 and sell it today you would earn a total of  2,598  from holding Visa Class A or generate 10.71% 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.  Blackrock Taxable Municipal

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.

Blackrock Taxable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Taxable Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Pair Trading with Visa and Blackrock Taxable

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

The idea behind Visa Class A and Blackrock Taxable Municipal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.