Correlation Between Visa and Global Standard
Can any of the company-specific risk be diversified away by investing in both Visa and Global Standard 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 Visa and Global Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Global Standard Technology, you can compare the effects of market volatilities on Visa and Global Standard 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 Visa with a short position of Global Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Global Standard.
Diversification Opportunities for Visa and Global Standard
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Global is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech and Visa 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 Visa Class A are associated (or correlated) with Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of Visa i.e., Visa and Global Standard go up and down completely randomly.
Pair Corralation between Visa and Global Standard
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.33 times more return on investment than Global Standard. However, Visa Class A is 3.06 times less risky than Global Standard. It trades about 0.35 of its potential returns per unit of risk. Global Standard Technology is currently generating about -0.1 per unit of risk. If you would invest 28,929 in Visa Class A on September 1, 2024 and sell it today you would earn a total of 2,579 from holding Visa Class A or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Global Standard Technology
Performance |
| Timeline |
| Visa Class A |
| Global Standard Tech |
Visa and Global Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Global Standard
The main advantage of trading using opposite Visa and Global Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Global Standard 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 Global Standard will offset losses from the drop in Global Standard's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Global Standard vs. Dongsin Engineering Construction | Global Standard vs. Doosan Fuel Cell | Global Standard vs. Daishin Balance 1 | Global Standard vs. Total Soft Bank |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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