Correlation Between Visa and JNK Heaters
Can any of the company-specific risk be diversified away by investing in both Visa and JNK Heaters 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 JNK Heaters 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 JNK Heaters Co, you can compare the effects of market volatilities on Visa and JNK Heaters 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 JNK Heaters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and JNK Heaters.
Diversification Opportunities for Visa and JNK Heaters
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and JNK is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and JNK Heaters Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JNK Heaters 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 JNK Heaters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JNK Heaters has no effect on the direction of Visa i.e., Visa and JNK Heaters go up and down completely randomly.
Pair Corralation between Visa and JNK Heaters
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the JNK Heaters. In addition to that, Visa is 1.03 times more volatile than JNK Heaters Co. It trades about -0.19 of its total potential returns per unit of risk. JNK Heaters Co is currently generating about -0.02 per unit of volatility. If you would invest 414,000 in JNK Heaters Co on January 5, 2025 and sell it today you would lose (6,000) from holding JNK Heaters Co or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. JNK Heaters Co
Performance |
| Timeline |
| Visa Class A |
| JNK Heaters |
Visa and JNK Heaters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and JNK Heaters
The main advantage of trading using opposite Visa and JNK Heaters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, JNK Heaters 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 JNK Heaters will offset losses from the drop in JNK Heaters' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| JNK Heaters vs. Hwangkum Steel Technology | JNK Heaters vs. Dongil Steel Co | JNK Heaters vs. Dongkuk Steel Mill | JNK Heaters vs. Hanil Iron Steel |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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