Correlation Between State Street and Visa
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Visa Class A, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Visa.
Diversification Opportunities for State Street and Visa
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and Visa is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp 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 State Street 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 State Street Corp 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 State Street i.e., State Street and Visa go up and down completely randomly.
Pair Corralation between State Street and Visa
Considering the 90-day investment horizon State Street Corp is expected to under-perform the Visa. In addition to that, State Street is 1.38 times more volatile than Visa Class A. It trades about -0.04 of its total potential returns per unit of risk. Visa Class A is currently generating about 0.08 per unit of volatility. If you would invest 25,839 in Visa Class A on January 31, 2024 and sell it today you would earn a total of 1,345 from holding Visa Class A or generate 5.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
State Street Corp vs. Visa Class A
Performance |
Timeline |
State Street Corp |
Visa Class A |
State Street and Visa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Street and Visa
The main advantage of trading using opposite State Street and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.State Street vs. Pimco Corporate Income | State Street vs. Pimco Income Strategy | State Street vs. Pcm Fund | State Street vs. Pimco High Income |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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