Correlation Between Visa and Cartica Acquisition
Can any of the company-specific risk be diversified away by investing in both Visa and Cartica Acquisition 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 Cartica Acquisition 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 Cartica Acquisition Corp, you can compare the effects of market volatilities on Visa and Cartica Acquisition 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 Cartica Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Cartica Acquisition.
Diversification Opportunities for Visa and Cartica Acquisition
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Cartica is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Cartica Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartica Acquisition Corp 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 Cartica Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartica Acquisition Corp has no effect on the direction of Visa i.e., Visa and Cartica Acquisition go up and down completely randomly.
Pair Corralation between Visa and Cartica Acquisition
Taking into account the 90-day investment horizon Visa is expected to generate 114.27 times less return on investment than Cartica Acquisition. But when comparing it to its historical volatility, Visa Class A is 23.95 times less risky than Cartica Acquisition. It trades about 0.08 of its potential returns per unit of risk. Cartica Acquisition Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Cartica Acquisition Corp on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Cartica Acquisition Corp or generate 160.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Visa Class A vs. Cartica Acquisition Corp
Performance |
| Timeline |
| Visa Class A |
| Cartica Acquisition Corp |
Visa and Cartica Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Cartica Acquisition
The main advantage of trading using opposite Visa and Cartica Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Cartica Acquisition 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 Cartica Acquisition will offset losses from the drop in Cartica Acquisition's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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