Correlation Between Visa and 1290 Smartbeta

Can any of the company-specific risk be diversified away by investing in both Visa and 1290 Smartbeta 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 1290 Smartbeta 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 1290 Smartbeta Equity, you can compare the effects of market volatilities on Visa and 1290 Smartbeta 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 1290 Smartbeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and 1290 Smartbeta.

Diversification Opportunities for Visa and 1290 Smartbeta

0.58

Correlation Coefficient

Visa  1290 Smartbeta

Very weak diversification

The 3 months correlation between Visa and 1290 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and 1290 Smartbeta Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Smartbeta Equity 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 1290 Smartbeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Smartbeta Equity has no effect on the direction of Visa i.e., Visa and 1290 Smartbeta go up and down completely randomly.

Pair Corralation between Visa and 1290 Smartbeta

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.73 times more return on investment than 1290 Smartbeta. However, Visa Class A is 1.36 times less risky than 1290 Smartbeta. It trades about 0.14 of its potential returns per unit of risk. 1290 Smartbeta Equity is currently generating about -0.14 per unit of risk. If you would invest  30,825  in Visa Class A on September 15, 2024 and sell it today you would earn a total of  649.00  from holding Visa Class A or generate 2.11% return on investment over 90 days.

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

Visa Class A  vs.  1290 Smartbeta Equity

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

1290 Smartbeta Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1290 Smartbeta Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, 1290 Smartbeta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and 1290 Smartbeta

The main advantage of trading using opposite Visa and 1290 Smartbeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, 1290 Smartbeta 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 1290 Smartbeta will offset losses from the drop in 1290 Smartbeta's long position.

The idea behind Visa Class A and 1290 Smartbeta Equity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.