Correlation Between ESH Acquisition and Visa
Can any of the company-specific risk be diversified away by investing in both ESH Acquisition and Visa 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 ESH Acquisition and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESH Acquisition Corp and Visa Class A, you can compare the effects of market volatilities on ESH Acquisition and Visa 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 ESH Acquisition with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESH Acquisition and Visa.
Diversification Opportunities for ESH Acquisition and Visa
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ESH and Visa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and ESH Acquisition 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 ESH Acquisition Corp are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of ESH Acquisition i.e., ESH Acquisition and Visa go up and down completely randomly.
Pair Corralation between ESH Acquisition and Visa
Given the investment horizon of 90 days ESH Acquisition is expected to generate 4.23 times less return on investment than Visa. But when comparing it to its historical volatility, ESH Acquisition Corp is 1.25 times less risky than Visa. It trades about 0.02 of its potential returns per unit of risk. Visa Class A is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 27,727 in Visa Class A on November 3, 2024 and sell it today you would earn a total of 6,453 from holding Visa Class A or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
ESH Acquisition Corp vs. Visa Class A
Performance |
| Timeline |
| ESH Acquisition Corp |
| Visa Class A |
ESH Acquisition and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESH Acquisition and Visa
The main advantage of trading using opposite ESH Acquisition and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESH Acquisition position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| ESH Acquisition vs. Playtika Holding Corp | ESH Acquisition vs. Motorsport Gaming Us | ESH Acquisition vs. Lizhan Environmental | ESH Acquisition vs. Gerdau SA ADR |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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