Correlation Between Visa and Carlyle
Can any of the company-specific risk be diversified away by investing in both Visa and Carlyle 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 Carlyle 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 Carlyle Group, you can compare the effects of market volatilities on Visa and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Carlyle.
Diversification Opportunities for Visa and Carlyle
Poor diversification
The 3 months correlation between Visa and Carlyle is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Visa i.e., Visa and Carlyle go up and down completely randomly.
Pair Corralation between Visa and Carlyle
Taking into account the 90-day investment horizon Visa is expected to generate 2.58 times less return on investment than Carlyle. But when comparing it to its historical volatility, Visa Class A is 2.12 times less risky than Carlyle. It trades about 0.08 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,322 in Carlyle Group on August 26, 2024 and sell it today you would earn a total of 2,043 from holding Carlyle Group or generate 61.5% 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. Carlyle Group
Performance |
| Timeline |
| Visa Class A |
| Carlyle Group |
Visa and Carlyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Carlyle
The main advantage of trading using opposite Visa and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Carlyle vs. PowerUp Acquisition Corp | Carlyle vs. Aurora Innovation | Carlyle vs. HUMANA INC | Carlyle vs. Aquagold International |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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