Correlation Between Visa and Formidable ETF

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

Diversification Opportunities for Visa and Formidable ETF

-0.25

Correlation Coefficient

Visa  Formidable ETF

Very good diversification

The 3 months correlation between Visa and Formidable is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF 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 Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Visa i.e., Visa and Formidable ETF go up and down completely randomly.

Pair Corralation between Visa and Formidable ETF

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Formidable ETF. In addition to that, Visa is 2.18 times more volatile than Formidable ETF. It trades about -0.08 of its total potential returns per unit of risk. Formidable ETF is currently generating about 0.1 per unit of volatility. If you would invest  2,238  in Formidable ETF on May 15, 2025 and sell it today you would earn a total of  88.00  from holding Formidable ETF or generate 3.93% return on investment over 90 days.

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

Visa Class A  vs.  Formidable ETF

Visa Class A

Risk-Adjusted Performance

Weakest

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 latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Formidable ETF

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Visa and Formidable ETF

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

The idea behind Visa Class A and Formidable ETF 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 Global Correlations module to find global opportunities by holding instruments from different markets.