Correlation Between Visa and Paragon Banking
Can any of the company-specific risk be diversified away by investing in both Visa and Paragon Banking 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 Paragon Banking 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 Paragon Banking Group, you can compare the effects of market volatilities on Visa and Paragon Banking 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 Paragon Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Paragon Banking.
Diversification Opportunities for Visa and Paragon Banking
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and Paragon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Paragon Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Banking Group 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 Paragon Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Banking Group has no effect on the direction of Visa i.e., Visa and Paragon Banking go up and down completely randomly.
Pair Corralation between Visa and Paragon Banking
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.42 times more return on investment than Paragon Banking. However, Visa Class A is 2.4 times less risky than Paragon Banking. It trades about 0.21 of its potential returns per unit of risk. Paragon Banking Group is currently generating about 0.05 per unit of risk. If you would invest 31,866 in Visa Class A on October 28, 2024 and sell it today you would earn a total of 1,154 from holding Visa Class A or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Visa Class A vs. Paragon Banking Group
Performance |
| Timeline |
| Visa Class A |
| Paragon Banking Group |
Visa and Paragon Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Paragon Banking
The main advantage of trading using opposite Visa and Paragon Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Paragon Banking 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 Paragon Banking will offset losses from the drop in Paragon Banking's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Paragon Banking vs. Carsales | Paragon Banking vs. Verizon Communications | Paragon Banking vs. TRADELINK ELECTRON | Paragon Banking vs. Ribbon 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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