Correlation Between Visa and ACNB
Can any of the company-specific risk be diversified away by investing in both Visa and ACNB 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 ACNB 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 ACNB Corporation, you can compare the effects of market volatilities on Visa and ACNB 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 ACNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and ACNB.
Diversification Opportunities for Visa and ACNB
Very poor diversification
The 3 months correlation between Visa and ACNB is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and ACNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACNB 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 ACNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACNB has no effect on the direction of Visa i.e., Visa and ACNB go up and down completely randomly.
Pair Corralation between Visa and ACNB
Taking into account the 90-day investment horizon Visa is expected to generate 1.28 times less return on investment than ACNB. But when comparing it to its historical volatility, Visa Class A is 2.32 times less risky than ACNB. It trades about 0.16 of its potential returns per unit of risk. ACNB Corporation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,085 in ACNB Corporation on August 31, 2024 and sell it today you would earn a total of 611.00 from holding ACNB Corporation or generate 14.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. ACNB Corp.
Performance |
| Timeline |
| Visa Class A |
| ACNB |
Visa and ACNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and ACNB
The main advantage of trading using opposite Visa and ACNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, ACNB 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 ACNB will offset losses from the drop in ACNB's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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