Correlation Between Visa and Blackrock Advantage

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

Diversification Opportunities for Visa and Blackrock Advantage

0.77

Correlation Coefficient

Visa  Blackrock Advantage

Poor diversification

The 3 months correlation between Visa and Blackrock is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Blackrock Advantage Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Large 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 Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Large has no effect on the direction of Visa i.e., Visa and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Visa and Blackrock Advantage

Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.04 times more return on investment than Blackrock Advantage. However, Visa is 2.04 times more volatile than Blackrock Advantage Large. It trades about 0.17 of its potential returns per unit of risk. Blackrock Advantage Large is currently generating about 0.21 per unit of risk. If you would invest  27,801  in Visa Class A on September 3, 2024 and sell it today you would earn a total of  3,864  from holding Visa Class A or generate 13.9% return on investment over 90 days.

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

Visa Class A  vs.  Blackrock Advantage Large

Visa Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Advantage Large

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Large are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady essential indicators, Blackrock Advantage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Visa and Blackrock Advantage

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

The idea behind Visa Class A and Blackrock Advantage Large 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.