Correlation Between Visa and Apple
Can any of the company-specific risk be diversified away by investing in both Visa and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Visa and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Apple.
Diversification Opportunities for Visa and Apple
Good diversification
The 3 months correlation between Visa and Apple is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Visa i.e., Visa and Apple go up and down completely randomly.
Pair Corralation between Visa and Apple
Taking into account the 90-day investment horizon Visa is expected to generate 1.33 times less return on investment than Apple. But when comparing it to its historical volatility, Visa Class A is 2.12 times less risky than Apple. It trades about 0.09 of its potential returns per unit of risk. Apple Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,304 in Apple Inc on August 30, 2024 and sell it today you would earn a total of 8,996 from holding Apple Inc or generate 62.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Visa Class A vs. Apple Inc
Performance |
| Timeline |
| Visa Class A |
| Apple Inc |
Visa and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Apple
The main advantage of trading using opposite Visa and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Apple vs. Scandinavian Tobacco Group | Apple vs. Mid Wynd International | Apple vs. Tyson Foods Cl | Apple vs. The Investment |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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