Correlation Between Visa and Invesco Nasdaq

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

Diversification Opportunities for Visa and Invesco Nasdaq

-0.64

Correlation Coefficient

Visa  Invesco Nasdaq

Excellent diversification

The 3 months correlation between Visa and Invesco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Invesco Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Nasdaq Biote 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 Invesco Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Nasdaq Biote has no effect on the direction of Visa i.e., Visa and Invesco Nasdaq go up and down completely randomly.

Pair Corralation between Visa and Invesco Nasdaq

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.94 times more return on investment than Invesco Nasdaq. However, Visa Class A is 1.07 times less risky than Invesco Nasdaq. It trades about 0.08 of its potential returns per unit of risk. Invesco Nasdaq Biotechnology is currently generating about 0.01 per unit of risk. If you would invest  21,608  in Visa Class A on October 9, 2024 and sell it today you would earn a total of  9,696  from holding Visa Class A or generate 44.87% return on investment over 90 days.

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

Visa Class A  vs.  Invesco Nasdaq Biotechnology

Visa Class A

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 15 (%) 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.

Invesco Nasdaq Biote

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Nasdaq Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Visa and Invesco Nasdaq

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

The idea behind Visa Class A and Invesco Nasdaq Biotechnology 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 CEOs Directory module to screen CEOs from public companies around the world.