Correlation Between Visa and Abacus Life
Can any of the company-specific risk be diversified away by investing in both Visa and Abacus Life 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 Abacus Life 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 Abacus Life, you can compare the effects of market volatilities on Visa and Abacus Life 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 Abacus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Abacus Life.
Diversification Opportunities for Visa and Abacus Life
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Abacus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Abacus Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Life 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 Abacus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Life has no effect on the direction of Visa i.e., Visa and Abacus Life go up and down completely randomly.
Pair Corralation between Visa and Abacus Life
Taking into account the 90-day investment horizon Visa is expected to generate 6.6 times less return on investment than Abacus Life. But when comparing it to its historical volatility, Visa Class A is 12.02 times less risky than Abacus Life. It trades about 0.28 of its potential returns per unit of risk. Abacus Life is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Abacus Life on November 28, 2024 and sell it today you would earn a total of 28.00 from holding Abacus Life or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Visa Class A vs. Abacus Life
Performance |
| Timeline |
| Visa Class A |
| Abacus Life |
Visa and Abacus Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Abacus Life
The main advantage of trading using opposite Visa and Abacus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Abacus Life 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 Abacus Life will offset losses from the drop in Abacus Life's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Abacus Life vs. Here Media | Abacus Life vs. Canlan Ice Sports | Abacus Life vs. Starwin Media Holdings | Abacus Life vs. National Beverage Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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