Correlation Between Visa and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Visa and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Visa and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BCB Bancorp.
Diversification Opportunities for Visa and BCB Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and BCB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Visa i.e., Visa and BCB Bancorp go up and down completely randomly.
Pair Corralation between Visa and BCB Bancorp
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.41 times more return on investment than BCB Bancorp. However, Visa Class A is 2.41 times less risky than BCB Bancorp. It trades about 0.08 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.01 per unit of risk. If you would invest 21,430 in Visa Class A on August 23, 2024 and sell it today you would earn a total of 9,309 from holding Visa Class A or generate 43.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. BCB Bancorp
Performance |
| Timeline |
| Visa Class A |
| BCB Bancorp |
Visa and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BCB Bancorp
The main advantage of trading using opposite Visa and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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