Correlation Between Visa and Allstate
Can any of the company-specific risk be diversified away by investing in both Visa and Allstate 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 Allstate 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 The Allstate, you can compare the effects of market volatilities on Visa and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Allstate.
Diversification Opportunities for Visa and Allstate
Excellent diversification
The 3 months correlation between Visa and Allstate is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Visa i.e., Visa and Allstate go up and down completely randomly.
Pair Corralation between Visa and Allstate
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.81 times more return on investment than Allstate. However, Visa Class A is 1.23 times less risky than Allstate. It trades about 0.09 of its potential returns per unit of risk. The Allstate is currently generating about 0.03 per unit of risk. If you would invest 20,460 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 10,859 from holding Visa Class A or generate 53.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. The Allstate
Performance |
| Timeline |
| Visa Class A |
| Allstate |
Visa and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Allstate
The main advantage of trading using opposite Visa and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Allstate vs. Aspen Insurance Holdings | Allstate vs. Aspen Insurance Holdings | Allstate vs. AmTrust Financial Services | Allstate vs. Argo Group International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |