Correlation Between Visa and Onyx Healthcare
Can any of the company-specific risk be diversified away by investing in both Visa and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare, you can compare the effects of market volatilities on Visa and Onyx Healthcare 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 Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Onyx Healthcare.
Diversification Opportunities for Visa and Onyx Healthcare
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Onyx is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Visa i.e., Visa and Onyx Healthcare go up and down completely randomly.
Pair Corralation between Visa and Onyx Healthcare
Taking into account the 90-day investment horizon Visa is expected to generate 2.24 times less return on investment than Onyx Healthcare. But when comparing it to its historical volatility, Visa Class A is 3.54 times less risky than Onyx Healthcare. It trades about 0.28 of its potential returns per unit of risk. Onyx Healthcare is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 16,400 in Onyx Healthcare on November 28, 2024 and sell it today you would earn a total of 1,350 from holding Onyx Healthcare or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.27% |
| Values | Daily Returns |
Visa Class A vs. Onyx Healthcare
Performance |
| Timeline |
| Visa Class A |
| Onyx Healthcare |
Visa and Onyx Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Onyx Healthcare
The main advantage of trading using opposite Visa and Onyx Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Onyx Healthcare 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 Onyx Healthcare will offset losses from the drop in Onyx Healthcare's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Onyx Healthcare vs. K Way Information | Onyx Healthcare vs. Gigastorage Corp | Onyx Healthcare vs. Jetway Information Co | Onyx Healthcare vs. Trade Van Information Services |
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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