Correlation Between Visa and BankUnited
Can any of the company-specific risk be diversified away by investing in both Visa and BankUnited 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 BankUnited 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 BankUnited, you can compare the effects of market volatilities on Visa and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BankUnited.
Diversification Opportunities for Visa and BankUnited
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and BankUnited is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Visa i.e., Visa and BankUnited go up and down completely randomly.
Pair Corralation between Visa and BankUnited
Taking into account the 90-day investment horizon Visa is expected to generate 2.04 times less return on investment than BankUnited. But when comparing it to its historical volatility, Visa Class A is 3.24 times less risky than BankUnited. It trades about 0.4 of its potential returns per unit of risk. BankUnited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,240 in BankUnited on August 30, 2024 and sell it today you would earn a total of 740.00 from holding BankUnited or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. BankUnited
Performance |
| Timeline |
| Visa Class A |
| BankUnited |
Visa and BankUnited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BankUnited
The main advantage of trading using opposite Visa and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BankUnited vs. Fifth Third Bancorp | BankUnited vs. Huntington Bancshares Incorporated | BankUnited vs. Superior Plus Corp | BankUnited vs. NMI Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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