Correlation Between Visa and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both Visa and Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty, you can compare the effects of market volatilities on Visa and Assured Guaranty 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 Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Assured Guaranty.
Diversification Opportunities for Visa and Assured Guaranty
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Assured is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty 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 Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of Visa i.e., Visa and Assured Guaranty go up and down completely randomly.
Pair Corralation between Visa and Assured Guaranty
Taking into account the 90-day investment horizon Visa is expected to generate 9.57 times less return on investment than Assured Guaranty. But when comparing it to its historical volatility, Visa Class A is 3.87 times less risky than Assured Guaranty. It trades about 0.05 of its potential returns per unit of risk. Assured Guaranty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,400 in Assured Guaranty on October 22, 2024 and sell it today you would earn a total of 500.00 from holding Assured Guaranty or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Visa Class A vs. Assured Guaranty
Performance |
| Timeline |
| Visa Class A |
| Assured Guaranty |
Visa and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Assured Guaranty
The main advantage of trading using opposite Visa and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Assured Guaranty vs. ARDAGH METAL PACDL 0001 | Assured Guaranty vs. ADRIATIC METALS LS 013355 | Assured Guaranty vs. ScanSource | Assured Guaranty vs. Coor Service Management |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |