Correlation Between Visa and Amana Income
Can any of the company-specific risk be diversified away by investing in both Visa and Amana Income 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 Amana Income 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 Amana Income Fund, you can compare the effects of market volatilities on Visa and Amana Income 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 Amana Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Amana Income.
Diversification Opportunities for Visa and Amana Income
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Amana is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Amana Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Income 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 Amana Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Income has no effect on the direction of Visa i.e., Visa and Amana Income go up and down completely randomly.
Pair Corralation between Visa and Amana Income
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.58 times more return on investment than Amana Income. However, Visa is 1.58 times more volatile than Amana Income Fund. It trades about 0.1 of its potential returns per unit of risk. Amana Income Fund is currently generating about 0.04 per unit of risk. If you would invest 26,960 in Visa Class A on September 12, 2024 and sell it today you would earn a total of 4,419 from holding Visa Class A or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Amana Income Fund
Performance |
| Timeline |
| Visa Class A |
| Amana Income |
Visa and Amana Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Amana Income
The main advantage of trading using opposite Visa and Amana Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Amana Income 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 Amana Income will offset losses from the drop in Amana Income's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Amana Income vs. Amana Growth Fund | Amana Income vs. Amana Developing World | Amana Income vs. Amana Developing World | Amana Income vs. Amana Income Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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