Correlation Between Visa and Blackrock Smid-cap

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

Diversification Opportunities for Visa and Blackrock Smid-cap

0.29

Correlation Coefficient

Visa  Blackrock Smid-cap

Modest diversification

The 3 months correlation between Visa and Blackrock is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap 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 Blackrock Smid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of Visa i.e., Visa and Blackrock Smid-cap go up and down completely randomly.

Pair Corralation between Visa and Blackrock Smid-cap

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.87 times more return on investment than Blackrock Smid-cap. However, Visa Class A is 1.15 times less risky than Blackrock Smid-cap. It trades about 0.22 of its potential returns per unit of risk. Blackrock Smid Cap Growth is currently generating about 0.14 per unit of risk. If you would invest  28,119  in Visa Class A on October 25, 2024 and sell it today you would earn a total of  4,237  from holding Visa Class A or generate 15.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Blackrock Smid Cap Growth

Visa Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 17 (%) 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.

Blackrock Smid Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Smid Cap Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Smid-cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Visa and Blackrock Smid-cap

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

The idea behind Visa Class A and Blackrock Smid Cap Growth 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.