Correlation Between Visa and Aspen Group
Can any of the company-specific risk be diversified away by investing in both Visa and Aspen Group 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 Aspen Group 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 Aspen Group Unit, you can compare the effects of market volatilities on Visa and Aspen Group 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 Aspen Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Aspen Group.
Diversification Opportunities for Visa and Aspen Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Aspen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Aspen Group Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Group Unit 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 Aspen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Group Unit has no effect on the direction of Visa i.e., Visa and Aspen Group go up and down completely randomly.
Pair Corralation between Visa and Aspen Group
Taking into account the 90-day investment horizon Visa is expected to generate 2.72 times less return on investment than Aspen Group. But when comparing it to its historical volatility, Visa Class A is 1.62 times less risky than Aspen Group. It trades about 0.1 of its potential returns per unit of risk. Aspen Group Unit is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Aspen Group Unit on September 3, 2024 and sell it today you would earn a total of 87.00 from holding Aspen Group Unit or generate 50.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Visa Class A vs. Aspen Group Unit
Performance |
| Timeline |
| Visa Class A |
| Aspen Group Unit |
Visa and Aspen Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Aspen Group
The main advantage of trading using opposite Visa and Aspen Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Aspen Group 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 Aspen Group will offset losses from the drop in Aspen Group's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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