Correlation Between Visa and HANetf ICAV

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

Diversification Opportunities for Visa and HANetf ICAV

-0.08

Correlation Coefficient

Visa  HANetf ICAV

Good diversification

The 3 months correlation between Visa and HANetf is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of Visa i.e., Visa and HANetf ICAV go up and down completely randomly.

Pair Corralation between Visa and HANetf ICAV

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.8 times more return on investment than HANetf ICAV. However, Visa Class A is 1.25 times less risky than HANetf ICAV. It trades about 0.14 of its potential returns per unit of risk. HANetf ICAV is currently generating about -0.14 per unit of risk. If you would invest  31,182  in Visa Class A on September 27, 2024 and sell it today you would earn a total of  909.00  from holding Visa Class A or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Visa Class A  vs.  HANetf ICAV

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.

HANetf ICAV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HANetf ICAV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HANetf ICAV is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and HANetf ICAV

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

The idea behind Visa Class A and HANetf ICAV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.