Correlation Between Visa and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Visa and Connecticut Light 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 Connecticut Light 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 The Connecticut Light, you can compare the effects of market volatilities on Visa and Connecticut Light 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 Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Connecticut Light.
Diversification Opportunities for Visa and Connecticut Light
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Connecticut is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light 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 Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Visa i.e., Visa and Connecticut Light go up and down completely randomly.
Pair Corralation between Visa and Connecticut Light
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.94 times more return on investment than Connecticut Light. However, Visa Class A is 1.06 times less risky than Connecticut Light. It trades about 0.33 of its potential returns per unit of risk. The Connecticut Light is currently generating about -0.07 per unit of risk. If you would invest 29,129 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 2,379 from holding Visa Class A or generate 8.17% 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. The Connecticut Light
Performance |
| Timeline |
| Visa Class A |
| Connecticut Light |
Visa and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Connecticut Light
The main advantage of trading using opposite Visa and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Connecticut Light vs. The Connecticut Light | Connecticut Light vs. The Connecticut Light | Connecticut Light vs. PacifiCorp | Connecticut Light vs. Nextera Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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