Correlation Between Visa and KODEX Metaverse

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

Diversification Opportunities for Visa and KODEX Metaverse

0.91

Correlation Coefficient

Visa  KODEX Metaverse

Almost no diversification

The 3 months correlation between Visa and KODEX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and KODEX Metaverse Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX Metaverse Nasdaq 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 KODEX Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX Metaverse Nasdaq has no effect on the direction of Visa i.e., Visa and KODEX Metaverse go up and down completely randomly.

Pair Corralation between Visa and KODEX Metaverse

Taking into account the 90-day investment horizon Visa is expected to generate 1.56 times less return on investment than KODEX Metaverse. But when comparing it to its historical volatility, Visa Class A is 1.92 times less risky than KODEX Metaverse. It trades about 0.14 of its potential returns per unit of risk. KODEX Metaverse Nasdaq is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,472,500  in KODEX Metaverse Nasdaq on October 26, 2024 and sell it today you would earn a total of  123,000  from holding KODEX Metaverse Nasdaq or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.56%
Values	Daily Returns

Visa Class A  vs.  KODEX Metaverse Nasdaq

Visa Class A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa showed solid returns over the last few months and may actually be approaching a breakup point.

KODEX Metaverse Nasdaq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KODEX Metaverse Nasdaq are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KODEX Metaverse sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and KODEX Metaverse

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

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