Correlation Between Visa and Bain Capital
Can any of the company-specific risk be diversified away by investing in both Visa and Bain Capital 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 Bain Capital 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 Bain Capital Specialty, you can compare the effects of market volatilities on Visa and Bain Capital 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 Bain Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bain Capital.
Diversification Opportunities for Visa and Bain Capital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Visa and Bain is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Bain Capital Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bain Capital Specialty 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 Bain Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bain Capital Specialty has no effect on the direction of Visa i.e., Visa and Bain Capital go up and down completely randomly.
Pair Corralation between Visa and Bain Capital
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.01 times more return on investment than Bain Capital. However, Visa is 1.01 times more volatile than Bain Capital Specialty. It trades about 0.49 of its potential returns per unit of risk. Bain Capital Specialty is currently generating about 0.19 per unit of risk. If you would invest 31,440 in Visa Class A on November 2, 2024 and sell it today you would earn a total of 2,865 from holding Visa Class A or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Bain Capital Specialty
Performance |
| Timeline |
| Visa Class A |
| Bain Capital Specialty |
Visa and Bain Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bain Capital
The main advantage of trading using opposite Visa and Bain Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Bain Capital 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 Bain Capital will offset losses from the drop in Bain Capital's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Bain Capital vs. BlackRock TCP Capital | Bain Capital vs. Triplepoint Venture Growth | Bain Capital vs. Sixth Street Specialty | Bain Capital vs. Golub Capital BDC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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