Correlation Between Finance Of and Visa
Can any of the company-specific risk be diversified away by investing in both Finance Of 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 Finance Of and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finance of America and Visa Class A, you can compare the effects of market volatilities on Finance Of 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 Finance Of with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finance Of and Visa.
Diversification Opportunities for Finance Of and Visa
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Finance and Visa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Finance of America 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 Finance Of 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 Finance of America 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 Finance Of i.e., Finance Of and Visa go up and down completely randomly.
Pair Corralation between Finance Of and Visa
Considering the 90-day investment horizon Finance of America is expected to generate 9.54 times more return on investment than Visa. However, Finance Of is 9.54 times more volatile than Visa Class A. It trades about 0.22 of its potential returns per unit of risk. Visa Class A is currently generating about 0.23 per unit of risk. If you would invest 1,285 in Finance of America on September 5, 2024 and sell it today you would earn a total of 702.00 from holding Finance of America or generate 54.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finance of America vs. Visa Class A
Performance |
| Timeline |
| Finance of America |
| Visa Class A |
Finance Of and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finance Of and Visa
The main advantage of trading using opposite Finance Of and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finance Of 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.The idea behind Finance of America and Visa Class A 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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