Correlation Between Visa and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both Visa and Arbor Realty 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 Arbor Realty 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 Arbor Realty Trust, you can compare the effects of market volatilities on Visa and Arbor Realty 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 Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Arbor Realty.
Diversification Opportunities for Visa and Arbor Realty
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Arbor is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust 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 Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Visa i.e., Visa and Arbor Realty go up and down completely randomly.
Pair Corralation between Visa and Arbor Realty
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.48 times more return on investment than Arbor Realty. However, Visa Class A is 2.08 times less risky than Arbor Realty. It trades about 0.1 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.03 per unit of risk. If you would invest 26,322 in Visa Class A on November 9, 2024 and sell it today you would earn a total of 8,426 from holding Visa Class A or generate 32.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Arbor Realty Trust
Performance |
| Timeline |
| Visa Class A |
| Arbor Realty Trust |
Visa and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Arbor Realty
The main advantage of trading using opposite Visa and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Arbor Realty 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 Arbor Realty will offset losses from the drop in Arbor Realty's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Arbor Realty vs. Starwood Property Trust | Arbor Realty vs. Ready Capital Corp | Arbor Realty vs. Two Harbors Investments | Arbor Realty vs. AGNC Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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