Correlation Between Visa and Solo Brands
Can any of the company-specific risk be diversified away by investing in both Visa and Solo Brands 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 Solo Brands 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 Solo Brands, you can compare the effects of market volatilities on Visa and Solo Brands 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 Solo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Solo Brands.
Diversification Opportunities for Visa and Solo Brands
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Solo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands 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 Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of Visa i.e., Visa and Solo Brands go up and down completely randomly.
Pair Corralation between Visa and Solo Brands
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.72 times more return on investment than Solo Brands. However, Visa Class A is 1.4 times less risky than Solo Brands. It trades about 0.56 of its potential returns per unit of risk. Solo Brands is currently generating about -0.55 per unit of risk. If you would invest 31,260 in Visa Class A on November 9, 2024 and sell it today you would earn a total of 3,488 from holding Visa Class A or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Solo Brands
Performance |
| Timeline |
| Visa Class A |
| Solo Brands |
Visa and Solo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Solo Brands
The main advantage of trading using opposite Visa and Solo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Solo Brands 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 Solo Brands will offset losses from the drop in Solo Brands' long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Solo Brands vs. Qurate Retail Series | Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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