Correlation Between Visa and Capital One
Can any of the company-specific risk be diversified away by investing in both Visa and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on Visa and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Capital One.
Diversification Opportunities for Visa and Capital One
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Visa and Capital is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Visa i.e., Visa and Capital One go up and down completely randomly.
Pair Corralation between Visa and Capital One
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.82 times more return on investment than Capital One. However, Visa Class A is 1.23 times less risky than Capital One. It trades about 0.09 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.04 per unit of risk. If you would invest 20,586 in Visa Class A on August 27, 2024 and sell it today you would earn a total of 10,406 from holding Visa Class A or generate 50.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Capital One Financial
Performance |
| Timeline |
| Visa Class A |
| Capital One Financial |
Visa and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Capital One
The main advantage of trading using opposite Visa and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Capital One vs. Capital One Financial | Capital One vs. Wells Fargo | Capital One vs. Bank of America | Capital One vs. Capital One 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |