Correlation Between Visa and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Visa and Horizon Active 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 Horizon Active 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 Horizon Active Risk, you can compare the effects of market volatilities on Visa and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Horizon Active.
Diversification Opportunities for Visa and Horizon Active
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Horizon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of Visa i.e., Visa and Horizon Active go up and down completely randomly.
Pair Corralation between Visa and Horizon Active
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.76 times more return on investment than Horizon Active. However, Visa is 1.76 times more volatile than Horizon Active Risk. It trades about 0.33 of its potential returns per unit of risk. Horizon Active Risk is currently generating about 0.09 per unit of risk. If you would invest 28,960 in Visa Class A on August 31, 2024 and sell it today you would earn a total of 2,510 from holding Visa Class A or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Horizon Active Risk
Performance |
| Timeline |
| Visa Class A |
| Horizon Active Risk |
Visa and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Horizon Active
The main advantage of trading using opposite Visa and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Horizon Active vs. Horizon Active Risk | Horizon Active vs. Calvert Aggressive Allocation | Horizon Active vs. American Beacon Small | Horizon Active vs. Ariel International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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