Correlation Between Visa and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Visa and WisdomTree Japan 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 WisdomTree Japan 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 WisdomTree Japan SmallCap, you can compare the effects of market volatilities on Visa and WisdomTree Japan 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 WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and WisdomTree Japan.
Diversification Opportunities for Visa and WisdomTree Japan
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and WisdomTree is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and WisdomTree Japan SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan SmallCap 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 WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan SmallCap has no effect on the direction of Visa i.e., Visa and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Visa and WisdomTree Japan
Taking into account the 90-day investment horizon Visa is expected to generate 14.1 times less return on investment than WisdomTree Japan. In addition to that, Visa is 1.56 times more volatile than WisdomTree Japan SmallCap. It trades about 0.0 of its total potential returns per unit of risk. WisdomTree Japan SmallCap is currently generating about 0.07 per unit of volatility. If you would invest 8,022 in WisdomTree Japan SmallCap on March 22, 2025 and sell it today you would earn a total of 454.00 from holding WisdomTree Japan SmallCap or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. WisdomTree Japan SmallCap
Performance |
| Timeline |
| Visa Class A |
| WisdomTree Japan SmallCap |
Visa and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and WisdomTree Japan
The main advantage of trading using opposite Visa and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, WisdomTree Japan 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 WisdomTree Japan will offset losses from the drop in WisdomTree Japan's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| WisdomTree Japan vs. WisdomTree Global ex US | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. WisdomTree International MidCap | WisdomTree Japan vs. WisdomTree Global High |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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