Correlation Between Futuretech and Visa
Can any of the company-specific risk be diversified away by investing in both Futuretech 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 Futuretech and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futuretech II Acquisition and Visa Class A, you can compare the effects of market volatilities on Futuretech 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 Futuretech with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuretech and Visa.
Diversification Opportunities for Futuretech and Visa
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Futuretech and Visa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Futuretech II Acquisition 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 Futuretech 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 Futuretech II Acquisition 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 Futuretech i.e., Futuretech and Visa go up and down completely randomly.
Pair Corralation between Futuretech and Visa
Given the investment horizon of 90 days Futuretech is expected to generate 7.19 times less return on investment than Visa. But when comparing it to its historical volatility, Futuretech II Acquisition is 1.57 times less risky than Visa. It trades about 0.08 of its potential returns per unit of risk. Visa Class A is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futuretech II Acquisition vs. Visa Class A
Performance |
| Timeline |
| Futuretech II Acquisition |
| Visa Class A |
Futuretech and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futuretech and Visa
The main advantage of trading using opposite Futuretech and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuretech 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.| Futuretech vs. Visa Class A | Futuretech vs. Diamond Hill Investment | Futuretech vs. Distoken Acquisition | Futuretech vs. Associated Capital Group |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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