Correlation Between SLM Corp and Visa
Can any of the company-specific risk be diversified away by investing in both SLM Corp 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 SLM Corp and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLM Corp and Visa Class A, you can compare the effects of market volatilities on SLM Corp 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 SLM Corp with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Visa.
Diversification Opportunities for SLM Corp and Visa
Poor diversification
The 3 months correlation between SLM and Visa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SLM 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 SLM Corp 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 SLM 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 SLM Corp i.e., SLM Corp and Visa go up and down completely randomly.
Pair Corralation between SLM Corp and Visa
Considering the 90-day investment horizon SLM Corp is expected to generate 3.41 times more return on investment than Visa. However, SLM Corp is 3.41 times more volatile than Visa Class A. It trades about 0.24 of its potential returns per unit of risk. Visa Class A is currently generating about 0.09 per unit of risk. If you would invest 2,396 in SLM Corp on September 13, 2024 and sell it today you would earn a total of 327.00 from holding SLM Corp or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp vs. Visa Class A
Performance |
| Timeline |
| SLM Corp |
| Visa Class A |
SLM Corp and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Visa
The main advantage of trading using opposite SLM Corp and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp 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.| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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