Correlation Between United States and Visa
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Visa Inc, you can compare the effects of market volatilities on United States 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 United States with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Visa.
Diversification Opportunities for United States and Visa
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Visa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and United States 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 United States Steel 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 Inc has no effect on the direction of United States i.e., United States and Visa go up and down completely randomly.
Pair Corralation between United States and Visa
Assuming the 90 days trading horizon United States Steel is expected to under-perform the Visa. In addition to that, United States is 1.31 times more volatile than Visa Inc. It trades about -0.08 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.16 per unit of volatility. If you would invest 9,000 in Visa Inc on September 12, 2024 and sell it today you would earn a total of 500.00 from holding Visa Inc or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Visa Inc
Performance |
| Timeline |
| United States Steel |
| Visa Inc |
United States and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Visa
The main advantage of trading using opposite United States and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Companhia Siderrgica Nacional | United States vs. Metalurgica Gerdau SA | United States vs. Metalurgica Gerdau SA | United States vs. Usinas Siderrgicas de |
| Visa vs. Telecomunicaes Brasileiras SA | Visa vs. United States Steel | Visa vs. MAHLE Metal Leve | Visa vs. Charter Communications |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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