Correlation Between Visa and IShares Biotechnology

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

Diversification Opportunities for Visa and IShares Biotechnology

-0.19

Correlation Coefficient

Visa  IShares Biotechnology

Good diversification

The 3 months correlation between Visa and IShares is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and iShares Biotechnology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Biotechnology 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 IShares Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Biotechnology ETF has no effect on the direction of Visa i.e., Visa and IShares Biotechnology go up and down completely randomly.

Pair Corralation between Visa and IShares Biotechnology

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the IShares Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.05 times less risky than IShares Biotechnology. The stock trades about -0.02 of its potential returns per unit of risk. The iShares Biotechnology ETF is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  11,860  in iShares Biotechnology ETF on May 6, 2025 and sell it today you would earn a total of  1,512  from holding iShares Biotechnology ETF or generate 12.75% 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.  iShares Biotechnology ETF

Visa Class A

Risk-Adjusted Performance

Very Weak

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 fairly stable basic indicators, Visa is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Biotechnology ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Biotechnology ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, IShares Biotechnology may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Visa and IShares Biotechnology

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

The idea behind Visa Class A and iShares Biotechnology 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..