Correlation Between Healthcare and Visa
Can any of the company-specific risk be diversified away by investing in both Healthcare 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 Healthcare and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Healthcare AI Acquisition and Visa Class A, you can compare the effects of market volatilities on Healthcare 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 Healthcare with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthcare and Visa.
Diversification Opportunities for Healthcare and Visa
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Healthcare and Visa is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare AI 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 Healthcare 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 Healthcare AI 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 Healthcare i.e., Healthcare and Visa go up and down completely randomly.
Pair Corralation between Healthcare and Visa
Assuming the 90 days horizon Healthcare AI Acquisition is expected to generate 30.96 times more return on investment than Visa. However, Healthcare is 30.96 times more volatile than Visa Class A. It trades about 0.28 of its potential returns per unit of risk. Visa Class A is currently generating about 0.28 per unit of risk. If you would invest 1.16 in Healthcare AI Acquisition on September 5, 2024 and sell it today you would earn a total of 1.07 from holding Healthcare AI Acquisition or generate 92.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.09% |
| Values | Daily Returns |
Healthcare AI Acquisition vs. Visa Class A
Performance |
| Timeline |
| Healthcare AI Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Visa Class A |
Healthcare and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Healthcare and Visa
The main advantage of trading using opposite Healthcare and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare 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 Healthcare AI Acquisition 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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