Correlation Between Visa and ARCA Oil | V vs. XOI.INDX

Correlation Between Visa and ARCA Oil

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Visa and ARCA Oil 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 ARCA Oil 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 ARCA Oil, you can compare the effects of market volatilities on Visa and ARCA Oil 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 ARCA Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ARCA Oil.

Diversification Opportunities for Visa and ARCA Oil

VisaARCADiversified AwayVisaARCADiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Visa and ARCA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ARCA Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Oil 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 ARCA Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Oil has no effect on the direction of Visa i.e., Visa and ARCA Oil go up and down completely randomly.
    Optimize

Pair Corralation between Visa and ARCA Oil

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than ARCA Oil. However, Visa Class A is 1.36 times less risky than ARCA Oil. It trades about 0.07 of its potential returns per unit of risk. ARCA Oil is currently generating about 0.01 per unit of risk. If you would invest  22,557  in Visa Class A on October 21, 2024 and sell it today you would earn a total of  9,405  from holding Visa Class A or generate 41.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Visa Class A  vs.  ARCA Oil

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -15-10-5051015
JavaScript chart by amCharts 3.21.15V XOI
       Timeline  

Visa and ARCA Oil Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.39-2.54-1.69-0.840.00.91.842.783.714.65 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15V XOI
       Returns  

Pair Trading with Visa and ARCA Oil

The main advantage of trading using opposite Visa and ARCA Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ARCA Oil 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 ARCA Oil will offset losses from the drop in ARCA Oil's long position.
The idea behind Visa Class A and ARCA Oil 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities