Correlation Between Regional Management and Visa
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Visa Class A, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Visa.
Diversification Opportunities for Regional Management and Visa
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and Visa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management 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 Regional Management 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 Regional Management 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 Regional Management i.e., Regional Management and Visa go up and down completely randomly.
Pair Corralation between Regional Management and Visa
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 2.46 times more return on investment than Visa. However, Regional Management is 2.46 times more volatile than Visa Class A. It trades about 0.08 of its potential returns per unit of risk. Visa Class A is currently generating about 0.07 per unit of risk. If you would invest 2,187 in Regional Management Corp on September 1, 2024 and sell it today you would earn a total of 866.00 from holding Regional Management Corp or generate 39.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Visa Class A
Performance |
| Timeline |
| Regional Management Corp |
| Visa Class A |
Regional Management and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Visa
The main advantage of trading using opposite Regional Management and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. 360 Finance | Regional Management vs. Atlanticus Holdings | Regional Management vs. Qudian Inc | Regional Management vs. Enova International |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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