Correlation Between Visa and MedPacto
Can any of the company-specific risk be diversified away by investing in both Visa and MedPacto 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 MedPacto 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 MedPacto, you can compare the effects of market volatilities on Visa and MedPacto 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 MedPacto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and MedPacto.
Diversification Opportunities for Visa and MedPacto
Pay attention - limited upside
The 3 months correlation between Visa and MedPacto is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and MedPacto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedPacto 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 MedPacto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedPacto has no effect on the direction of Visa i.e., Visa and MedPacto go up and down completely randomly.
Pair Corralation between Visa and MedPacto
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.28 times more return on investment than MedPacto. However, Visa Class A is 3.56 times less risky than MedPacto. It trades about 0.35 of its potential returns per unit of risk. MedPacto is currently generating about -0.04 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 | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Visa Class A vs. MedPacto
Performance |
| Timeline |
| Visa Class A |
| MedPacto |
Visa and MedPacto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and MedPacto
The main advantage of trading using opposite Visa and MedPacto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, MedPacto 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 MedPacto will offset losses from the drop in MedPacto's long position.| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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