Correlation Between Visa and GraniteShares

Can any of the company-specific risk be diversified away by investing in both Visa and GraniteShares 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 GraniteShares 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 GraniteShares 3x Long, you can compare the effects of market volatilities on Visa and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and GraniteShares.

Diversification Opportunities for Visa and GraniteShares

0.12

Correlation Coefficient

Visa  GraniteShares

Average diversification

The 3 months correlation between Visa and GraniteShares is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and GraniteShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Long 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 GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Long has no effect on the direction of Visa i.e., Visa and GraniteShares go up and down completely randomly.

Pair Corralation between Visa and GraniteShares

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.24 times more return on investment than GraniteShares. However, Visa Class A is 4.2 times less risky than GraniteShares. It trades about 0.13 of its potential returns per unit of risk. GraniteShares 3x Long is currently generating about -0.1 per unit of risk. If you would invest  31,478  in Visa Class A on December 30, 2024 and sell it today you would earn a total of  2,807  from holding Visa Class A or generate 8.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Visa Class A  vs.  GraniteShares 3x Long

Visa Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GraniteShares 3x Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days GraniteShares 3x Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Visa and GraniteShares

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

The idea behind Visa Class A and GraniteShares 3x Long 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.