Correlation Between Visa and Heartbeam
Can any of the company-specific risk be diversified away by investing in both Visa and Heartbeam 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 Heartbeam 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 Heartbeam, you can compare the effects of market volatilities on Visa and Heartbeam 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 Heartbeam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Heartbeam.
Diversification Opportunities for Visa and Heartbeam
Poor diversification
The 3 months correlation between Visa and Heartbeam is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Heartbeam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam 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 Heartbeam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam has no effect on the direction of Visa i.e., Visa and Heartbeam go up and down completely randomly.
Pair Corralation between Visa and Heartbeam
Taking into account the 90-day investment horizon Visa is expected to generate 2.05 times less return on investment than Heartbeam. But when comparing it to its historical volatility, Visa Class A is 5.92 times less risky than Heartbeam. It trades about 0.1 of its potential returns per unit of risk. Heartbeam is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Heartbeam on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Heartbeam or generate 16.35% 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. Heartbeam
Performance |
| Timeline |
| Visa Class A |
| Heartbeam |
Visa and Heartbeam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Heartbeam
The main advantage of trading using opposite Visa and Heartbeam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Heartbeam 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 Heartbeam will offset losses from the drop in Heartbeam's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Heartbeam vs. Profound Medical Corp | Heartbeam vs. Si Bone | Heartbeam vs. Sight Sciences | Heartbeam vs. Nevro Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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