Correlation Between Visa and Satrix Resi

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

Diversification Opportunities for Visa and Satrix Resi

-0.75

Correlation Coefficient

Visa  Satrix Resi

Pay attention - limited upside

The 3 months correlation between Visa and Satrix is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Satrix Resi ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix Resi ETF 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 Satrix Resi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix Resi ETF has no effect on the direction of Visa i.e., Visa and Satrix Resi go up and down completely randomly.

Pair Corralation between Visa and Satrix Resi

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.62 times more return on investment than Satrix Resi. However, Visa Class A is 1.6 times less risky than Satrix Resi. It trades about 0.19 of its potential returns per unit of risk. Satrix Resi ETF is currently generating about -0.05 per unit of risk. If you would invest  27,640  in Visa Class A on October 9, 2024 and sell it today you would earn a total of  3,664  from holding Visa Class A or generate 13.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Visa Class A  vs.  Satrix Resi ETF

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.

Satrix Resi ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satrix Resi ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Satrix Resi is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Visa and Satrix Resi

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

The idea behind Visa Class A and Satrix Resi ETF 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.