Correlation Between Visa and Beta ETF

Can any of the company-specific risk be diversified away by investing in both Visa and Beta ETF 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 Beta ETF 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 Beta ETF Nasdaq 100, you can compare the effects of market volatilities on Visa and Beta ETF 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 Beta ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Beta ETF.

Diversification Opportunities for Visa and Beta ETF

-0.38

Correlation Coefficient

Visa  Beta ETF

Very good diversification

The 3 months correlation between Visa and Beta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Beta ETF Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta ETF Nasdaq 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 Beta ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta ETF Nasdaq has no effect on the direction of Visa i.e., Visa and Beta ETF go up and down completely randomly.

Pair Corralation between Visa and Beta ETF

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.59 times more return on investment than Beta ETF. However, Visa Class A is 1.69 times less risky than Beta ETF. It trades about 0.16 of its potential returns per unit of risk. Beta ETF Nasdaq 100 is currently generating about -0.16 per unit of risk. If you would invest  27,801  in Visa Class A on September 2, 2024 and sell it today you would earn a total of  3,707  from holding Visa Class A or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Visa Class A  vs.  Beta ETF Nasdaq 100

Visa Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 12 (%) 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.

Beta ETF Nasdaq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beta ETF Nasdaq 100 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Visa and Beta ETF

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

The idea behind Visa Class A and Beta ETF Nasdaq 100 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.