Correlation Between SK Growth and Visa
Can any of the company-specific risk be diversified away by investing in both SK Growth 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 SK Growth and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Growth Opportunities and Visa Class A, you can compare the effects of market volatilities on SK Growth 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 SK Growth with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Growth and Visa.
Diversification Opportunities for SK Growth and Visa
Poor diversification
The 3 months correlation between SKGR and Visa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SK Growth Opportunities 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 SK Growth 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 SK Growth Opportunities 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 SK Growth i.e., SK Growth and Visa go up and down completely randomly.
Pair Corralation between SK Growth and Visa
Given the investment horizon of 90 days SK Growth is expected to generate 3.39 times less return on investment than Visa. But when comparing it to its historical volatility, SK Growth Opportunities is 7.75 times less risky than Visa. It trades about 0.19 of its potential returns per unit of risk. Visa Class A is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 27,758 in Visa Class A on September 5, 2024 and sell it today you would earn a total of 3,543 from holding Visa Class A or generate 12.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Growth Opportunities vs. Visa Class A
Performance |
| Timeline |
| SK Growth Opportunities |
| Visa Class A |
SK Growth and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Growth and Visa
The main advantage of trading using opposite SK Growth and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Growth 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.| SK Growth vs. Four Leaf Acquisition | SK Growth vs. WinVest Acquisition Corp | SK Growth vs. Thunder Bridge Capital | SK Growth vs. Pearl Holdings Acquisition |
| 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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