Correlation Between Visa and JPMorgan
Can any of the company-specific risk be diversified away by investing in both Visa and JPMorgan 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 JPMorgan 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 JPMorgan, you can compare the effects of market volatilities on Visa and JPMorgan 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 JPMorgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and JPMorgan.
Diversification Opportunities for Visa and JPMorgan
Weak diversification
The 3 months correlation between Visa and JPMorgan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and JPMorgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan 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 JPMorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan has no effect on the direction of Visa i.e., Visa and JPMorgan go up and down completely randomly.
Pair Corralation between Visa and JPMorgan
Taking into account the 90-day investment horizon Visa Class A is expected to generate 5.8 times more return on investment than JPMorgan. However, Visa is 5.8 times more volatile than JPMorgan. It trades about 0.09 of its potential returns per unit of risk. JPMorgan is currently generating about 0.14 per unit of risk. If you would invest 24,482 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 7,183 from holding Visa Class A or generate 29.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.97% |
| Values | Daily Returns |
Visa Class A vs. JPMorgan
Performance |
| Timeline |
| Visa Class A |
| JPMorgan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Visa and JPMorgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and JPMorgan
The main advantage of trading using opposite Visa and JPMorgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, JPMorgan 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 JPMorgan will offset losses from the drop in JPMorgan's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| JPMorgan vs. JPMorgan Core Plus | JPMorgan vs. JPMorgan BetaBuilders International | JPMorgan vs. JPMorgan BetaBuilders Equity | JPMorgan vs. JPMorgan BetaBuilders Canada |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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