Correlation Between First National and Visa
Can any of the company-specific risk be diversified away by investing in both First National 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 First National and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Financial and Visa Inc CDR, you can compare the effects of market volatilities on First National 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 First National with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Visa.
Diversification Opportunities for First National and Visa
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Visa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Visa Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc CDR and First National 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 First National Financial 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 Inc CDR has no effect on the direction of First National i.e., First National and Visa go up and down completely randomly.
Pair Corralation between First National and Visa
Assuming the 90 days trading horizon First National is expected to generate 4.23 times less return on investment than Visa. But when comparing it to its historical volatility, First National Financial is 1.31 times less risky than Visa. It trades about 0.11 of its potential returns per unit of risk. Visa Inc CDR is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,756 in Visa Inc CDR on September 1, 2024 and sell it today you would earn a total of 255.00 from holding Visa Inc CDR or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First National Financial vs. Visa Inc CDR
Performance |
| Timeline |
| First National Financial |
| Visa Inc CDR |
First National and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First National and Visa
The main advantage of trading using opposite First National and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National 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.| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
| Visa vs. Dream Office Real | Visa vs. Talon Metals Corp | Visa vs. Leons Furniture Limited | Visa vs. Maple Leaf Foods |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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