Correlation Between Visa and Popular
Can any of the company-specific risk be diversified away by investing in both Visa and Popular 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 Popular 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 Popular, you can compare the effects of market volatilities on Visa and Popular 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 Popular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Popular.
Diversification Opportunities for Visa and Popular
Very weak diversification
The 3 months correlation between Visa and Popular is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular 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 Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of Visa i.e., Visa and Popular go up and down completely randomly.
Pair Corralation between Visa and Popular
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.02 times more return on investment than Popular. However, Visa is 1.02 times more volatile than Popular. It trades about 0.05 of its potential returns per unit of risk. Popular is currently generating about 0.05 per unit of risk. If you would invest 31,722 in Visa Class A on October 23, 2024 and sell it today you would earn a total of 240.00 from holding Visa Class A or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Popular
Performance |
| Timeline |
| Visa Class A |
| Popular |
Visa and Popular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Popular
The main advantage of trading using opposite Visa and Popular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Popular 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 Popular will offset losses from the drop in Popular's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Popular vs. Penns Woods Bancorp | Popular vs. 1st Source | Popular vs. Great Southern Bancorp | Popular vs. Waterstone Financial |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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