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
Very good diversification
The 3 months correlation between Visa and Allstate is -0.24. 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 1.94 times more return on investment than Allstate. However, Visa is 1.94 times more volatile than The Allstate. It trades about 0.08 of its potential returns per unit of risk. The Allstate is currently generating about 0.09 per unit of risk. If you would invest 21,128 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 10,380 from holding Visa Class A or generate 49.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.63% |
| 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. 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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