Correlation Between Visa and VanEck Vietnam
Can any of the company-specific risk be diversified away by investing in both Visa and VanEck Vietnam 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 VanEck Vietnam 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 VanEck Vietnam ETF, you can compare the effects of market volatilities on Visa and VanEck Vietnam 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 VanEck Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and VanEck Vietnam.
Diversification Opportunities for Visa and VanEck Vietnam
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and VanEck is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and VanEck Vietnam ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vietnam 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 VanEck Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vietnam ETF has no effect on the direction of Visa i.e., Visa and VanEck Vietnam go up and down completely randomly.
Pair Corralation between Visa and VanEck Vietnam
Taking into account the 90-day investment horizon Visa is expected to generate 1.09 times less return on investment than VanEck Vietnam. In addition to that, Visa is 1.11 times more volatile than VanEck Vietnam ETF. It trades about 0.12 of its total potential returns per unit of risk. VanEck Vietnam ETF is currently generating about 0.14 per unit of volatility. If you would invest 1,171 in VanEck Vietnam ETF on December 25, 2024 and sell it today you would earn a total of 98.00 from holding VanEck Vietnam ETF or generate 8.37% 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. VanEck Vietnam ETF
Performance |
Timeline |
Visa Class A |
VanEck Vietnam ETF |
Visa and VanEck Vietnam Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and VanEck Vietnam
The main advantage of trading using opposite Visa and VanEck Vietnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, VanEck Vietnam 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 VanEck Vietnam will offset losses from the drop in VanEck Vietnam's long position.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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