Correlation Between Visa and Calfrac Well
Can any of the company-specific risk be diversified away by investing in both Visa and Calfrac Well 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 Calfrac Well 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 Calfrac Well Services, you can compare the effects of market volatilities on Visa and Calfrac Well 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 Calfrac Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Calfrac Well.
Diversification Opportunities for Visa and Calfrac Well
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Calfrac is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Calfrac Well Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calfrac Well Services 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 Calfrac Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calfrac Well Services has no effect on the direction of Visa i.e., Visa and Calfrac Well go up and down completely randomly.
Pair Corralation between Visa and Calfrac Well
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.63 times more return on investment than Calfrac Well. However, Visa Class A is 1.59 times less risky than Calfrac Well. It trades about 0.29 of its potential returns per unit of risk. Calfrac Well Services is currently generating about 0.05 per unit of risk. If you would invest 33,392 in Visa Class A on November 29, 2024 and sell it today you would earn a total of 1,671 from holding Visa Class A or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Calfrac Well Services
Performance |
| Timeline |
| Visa Class A |
| Calfrac Well Services |
Visa and Calfrac Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Calfrac Well
The main advantage of trading using opposite Visa and Calfrac Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Calfrac Well 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 Calfrac Well will offset losses from the drop in Calfrac Well's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Calfrac Well vs. Greenway Technologies | Calfrac Well vs. Akastor ASA | Calfrac Well vs. Auri Inc | Calfrac Well vs. Us Energy Initiative |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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