Correlation Between Visa and Associated Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Associated Capital 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 Associated Capital 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 Associated Capital Group, you can compare the effects of market volatilities on Visa and Associated Capital 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 Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Associated Capital.
Diversification Opportunities for Visa and Associated Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Associated is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital 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 Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Visa i.e., Visa and Associated Capital go up and down completely randomly.
Pair Corralation between Visa and Associated Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.52 times more return on investment than Associated Capital. However, Visa Class A is 1.93 times less risky than Associated Capital. It trades about 0.29 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.08 per unit of risk. If you would invest 27,442 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 4,028 from holding Visa Class A or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Associated Capital Group
Performance |
| Timeline |
| Visa Class A |
| Associated Capital |
Visa and Associated Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Associated Capital
The main advantage of trading using opposite Visa and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Associated Capital vs. TPG Inc | Associated Capital vs. Carlyle Secured Lending | Associated Capital vs. Brookfield 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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