Correlation Between Visa and STRATSSM Certificates

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

Diversification Opportunities for Visa and STRATSSM Certificates

0.14

Correlation Coefficient

Visa  STRATSSM Certificates

Average diversification

The 3 months correlation between Visa and STRATSSM is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and STRATSSM Certificates series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATSSM Certificates 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 STRATSSM Certificates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATSSM Certificates has no effect on the direction of Visa i.e., Visa and STRATSSM Certificates go up and down completely randomly.

Pair Corralation between Visa and STRATSSM Certificates

Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.61 times more return on investment than STRATSSM Certificates. However, Visa is 1.61 times more volatile than STRATSSM Certificates series. It trades about 0.13 of its potential returns per unit of risk. STRATSSM Certificates series is currently generating about 0.1 per unit of risk. If you would invest  31,216  in Visa Class A on September 19, 2024 and sell it today you would earn a total of  614.00  from holding Visa Class A or generate 1.97% return on investment over 90 days.

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

Visa Class A  vs.  STRATSSM Certificates series

Visa Class A

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

STRATSSM Certificates

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STRATSSM Certificates series are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, STRATSSM Certificates is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Visa and STRATSSM Certificates

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

The idea behind Visa Class A and STRATSSM Certificates series 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.